Match List I with List II and select the correct answer using the codes given below the Lists: List I List II I. Boom A) Business activity at high level with increasing income, output and employment at macro level II. Recession B) Gradual fall of income, output and employment with business activity in a low gear III. Depression C) Unprecedented level of under employment and unemployment, drastic fall in income, output and employment IV. Recovery D) Steady rise in the general level of prices, income, output and employment Codes:

Q 11 / 14

UPSC CSE Prelims 2000

Match List I with List II and select the correct answer using the codes given below the Lists:

List I	List II
I. Boom	A) Business activity at high level with increasing income, output and employment at macro level
II. Recession	B) Gradual fall of income, output and employment with business activity in a low gear
III. Depression	C) Unprecedented level of under employment and unemployment, drastic fall in income, output and employment
IV. Recovery	D) Steady rise in the general level of prices, income, output and employment

Codes:

EXPLANATION

Correct Option :

1) I-A, II-B, III-C, IV-D

The correct matching is as follows:

Boom (I): Characterized by a high level of business activity, marked by increasing income, output, and employment at the macroeconomic level. This represents a peak in the business cycle.
Recession (II): Involves a gradual decline in income, output, and employment, with business activity operating at a reduced pace. It signifies a contraction phase following a boom.
Depression (III): Represents an extreme and prolonged recession, characterized by unprecedented levels of underemployment and unemployment, coupled with a drastic fall in income, output, and employment. This is the trough of the business cycle.
Recovery (IV): Denotes a phase of steady rise in the general level of prices, income, output, and employment. It signifies the economy moving out of a recession or depression towards a boom.

Incorrect Options:

Options 2, 3, and 4 are incorrect because they do not accurately match the economic terms with their standard definitions in the context of business cycles.

Option 2 incorrectly associates Depression with a steady rise in prices, income, output, and employment, which is characteristic of Recovery.
Option 3 incorrectly defines Boom as a gradual fall in income, output, and employment, which describes a Recession. It also misattributes the characteristics of Recovery to Depression.
Option 4 incorrectly defines Boom as a gradual fall in income, output, and employment, similar to Option 3. It also misattributes the characteristics of Recovery to Depression.