Future Business Leaders of America (FBLA) Business Management Practice Test

Which term describes the simultaneous expansion and contraction of various industries?

1. Economy

2. Recession

3. Business cycle

4. Leading index

The correct answer is: Business cycle

The term that describes the simultaneous expansion and contraction of various industries is the business cycle. This concept refers to the fluctuations in economic activity that occur over time, characterized by periods of growth (expansion) and periods of decline (contraction). The business cycle illustrates how different sectors of the economy can experience growth at different times while also highlighting that not all industries contract simultaneously; some may thrive even when others face downturns. This cyclical nature helps economists analyze economic health and make predictions about future economic activity. Options such as the economy represent a broad system of production, consumption, and trade in a country, while recession specifically denotes a significant decline in economic activity across the economy lasting longer than a few months. The leading index refers to economic indicators that tend to change before the economy as a whole changes, providing insight into future economic activity. None of these terms encapsulate the dual movement of expansion and contraction within multiple industries as effectively as the business cycle does.