Question

Which of the following is a main economic variable that affects business cycles?
A. stagflation

B. national income accounting

C. interest rates

D. personal savings

Answer 1

Interest rates

Answer 2

A. Stafglation

Answer 3

Personal Savings. Personal savings determine interest rates, since interest is just a price for borrowing money. If there are a lot of savings (like during a recession), then money supply is high and interest rate is low. If there is a lot of investing (like during an expansion), then money supply is low and interest rates are high.

By definition a business cycle is the repeating process of savings exceeding investing and vice versa.

Answer 4

c.) interest rates Because,
Business cycle has four stages: (i) expansion (increase in production and prices, low interests rates); (ii) crisis (stock exchanges crash and multiple bankruptcies of firms occur); (iii) recession (drops in prices and in output, high interests rates); (iv) recovery (stocks recover because of the fall in prices and incomes).so interest rates comes in first stage hence a main economic variable

Answer 5

Hello mariacipri,
Interest rates could be an economic variable that affect business cycles. I say this because as a variable interest rates fluctuate in economies. The rate of the interest affects the way business functions. Loans for example are affected by interest rates. Thank you and have a great day.
Economist 1