Final answer:
The U.S. business cycle is characterized by countercyclical prices, stable consumption, fluctuating investment, and procyclical average labor productivity.
The correct option that does not characterize the U.S. business cycle is A) Prices are procyclical.
Step-by-step explanation:
The correct option that does not characterize the U.S. business cycle is A) Prices are procyclical. In reality, prices in the business cycle tend to be countercyclical, meaning they move in the opposite direction of the overall economy. For example, during economic downturns, prices may decrease in order to stimulate demand and encourage spending.
In contrast, option B) Consumption fluctuates little and option C) Investment fluctuates a lot are both correct characterizations of the U.S. business cycle. Consumption tends to be relatively stable because individuals and households have more stable income flows and tend to save during periods of economic uncertainty. On the other hand, investment fluctuates more due to changes in business confidence, interest rates, and market conditions.
Option D) Average labor productivity is procyclical is also a correct characterization of the U.S. business cycle. During periods of economic expansion, businesses often invest in new technologies, equipment, and training, which leads to increased labor productivity.
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