Question

How does the business cycle affect consumers? Check all that apply.

1.) It can be harder to find a job during an economic depression.
2.) Prices on food and clothing will tend to decrease during a time of prosperity.
3.) People tend to make more money during times of prosperity.
4.) It can be easier to find a job during an economic depression.
5.) Prices on gas and food will tend to increase during a time of prosperity.

Answer 1

The Economic Cycle is a theoretical explanation about the behavior of the economy, which changes between moments if expansion with prosperity and retraction with loss of economic and social welfare.

1.) It can be harder to find a job during an economic depression: Surely this can happen. An Economic Depression is a time of severe crisis in which many companies fire employees and go bankrupt. In an Economic Depression a high level of unemployment is expected.

3.) People tend to make more money during times of prosperity: Yes, in times of prosperity economic activity works at full steam, unemployment level is low and average income of the population increases. Thus, people and businesses thrive.

5.) Prices in gas and food will tend to increase during a time of prosperity: Yes, in times of prosperity demand for goods and services increases. Consequently, by the law of supply and demand, when the demand for a good increases, its price increases. This applies naturally to the price of gas and food.