The answer is: D. external shocks
External shocks refers to very unpredictable events that might influence a business in a certain direction (could be positive or negative), Example of external shocks would be things such as natural disaster or attacks from other country.
Since external shocks might never happen to a business, they could not be considered as a part of business cycle.
The correct option is (d).
External shocks are not one of the four factors, both expected and unexpected, perpetuate the business cycle.
Further Explanation:
External shocks:
The external shocks are unpredictable. External shocks do not affect the business cycle. Because the business cycle is not affected by the occurrence of external shocks. Some examples of external shocks are natural calamities. And natural calamities happen very rarely.
Justification for the correct and incorrect answer:
a-
Business investments: This option is incorrect.
The business investments are expected factors of investments.
b-
Interest rates and credit: This option is incorrect.
The interest rate and the credit are also expected and unexpected factors which affect the business cycle.
c-
Stagflation: This option is incorrect.
The stagflation is also an unexpected perpetuate business cycle.
d-
External shocks: This option is correct.
The external shocks are not any expected or unexpected factors which affect the business cycle. As external shocks are very rare, or exceptional cases, like the occurrence of a natural disaster or calamities which does not affect the business cycle much. External shocks are very unpredictable.
Therefore, the external shocks are not the expected or unexpected factor which affect the business cycle.
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Answer Details:
Grade: High School
Chapter: Business cycle
Subject: Business Studies
Keywords:
Four factors, both expected and unexpected, perpetuate the business cycle. which of the following is not one of these factors, business investments, interest rates and credit, stagflation, external shocks.
