Final answer:
The correct external factor affecting the business cycle from the options is bad weather, which is an exogenous factor that influences supply in the economy.
Step-by-step explanation:
The external factor that helps create the business cycle among the options given is option 1) bad weather. Bad weather can impact economic activities by affecting agricultural productivity, disrupting transportation systems, or causing damages that require repairs and reconstruction. Such events influence supply in the economy, which is considered an external or exogenous factor. Unlike internal factors like consumer spending, psychological factors, and government spending, external factors refer to those that lie outside the economic system itself. Government spending, while it has a significant impact on the economy, is not considered an external factor in this context; it is an internal policy tool controlled by the government to manage the economy.