CPIM Practice Exam

What is a cycle in economic demand?

1. Fast-moving trends within a short period

2. Wavelike patterns in economic growth and recession

3. Seasonal variations affecting demand

4. Consistent year-on-year sales growth

The correct answer is: Wavelike patterns in economic growth and recession

A cycle in economic demand typically refers to the recurring patterns of growth and decline that characterize the economy over time. This concept includes expansions, where the economy is growing, and contractions, where it experiences recessions. The wavelike nature of these patterns is crucial because it reflects the dynamics of various economic activities, consumer behaviors, and business investments. Understanding these cycles helps businesses and economists to forecast demand and make informed decisions. The other options pertain to different concepts. Fast-moving trends within a short period relate more to immediate market changes rather than long-term cycles. Seasonal variations affect demand in predictable, recurrent patterns based on the time of year, rather than the broader economic context captured by cycles. Consistent year-on-year sales growth suggests stability and is not indicative of the fluctuations inherent in economic cycles, which involve ups and downs rather than a straight path of growth.