Question 13
[Maximum number: 1]
Which stage of the business (trade) cycle is most likely to be characterised by an increasing negative output gap?
A
boom
B
recession
C
recovery
D
trough
CAIE A-Level Economics 9.2.3 Business cycle
Practise identifying business-cycle phases, recessions and automatic stabilisers from GDP data, tax systems and benefit payments.
How this is tested
- interpret GDP growth data to identify recession, downturn, recovery or trough phases
- explain how progressive tax and means-tested benefits act as automatic stabilisers
- link negative actual growth to unemployment, tax revenue and budget-deficit effects