LOS c: Analyze the effects of business cycles on industry classification (i.e., growth, defensive, cyclical).

Q1. Which of the following types of industries is typically characterized by above-normal expansion in sales and profits independent of the business cycle?

A)   Defensive.

B)   Counter-cyclical.

C)   Growth.

Q2. Which of the following types of industries is typically characterized by stable performance during both ups and downs of the business cycle?

A)   Growth.

B)   Defensive.

C)   Cyclical.

Q3. Food, beverage, and utility companies are examples of:

A)   defensive industries.

B)   cyclical industries.

C)   declining industries.

Q4. Which of the following types of industries is typically characterized by profitability tracking the business cycle, often in an exaggerated manner?

A)   Cyclical.

B)   Counter-cyclical.

C)   Growth.

LOS c: Analyze the effects of business cycles on industry classification (i.e., growth, defensive, cyclical). fficeffice" />

Q1. Which of the following types of industries is typically characterized by above-normal expansion in sales and profits independent of the business cycle?

A)   Defensive.

B)   Counter-cyclical.

C)   Growth.

Correct answer is C)

A growth industry is typically characterized by above-normal expansion in sales and profits independent of the business cycle.

Q2. Which of the following types of industries is typically characterized by stable performance during both ups and downs of the business cycle?

A)   Growth.

B)   Defensive.

C)   Cyclical.

Correct answer is B)

A defensive industry is typically characterized by stable performance during both ups and downs of the business cycle.

Q3. Food, beverage, and utility companies are examples of:

A)   defensive industries.

B)   cyclical industries.

C)   declining industries.

Correct answer is A)

This question tests your understanding of the business cycle reaction approach. Food, beverage, and utility companies provide basic necessities of life and are considered to be defensive industries. In a recession, the demand for their products will not fall as much as for some of the other industry groups.

Q4. Which of the following types of industries is typically characterized by profitability tracking the business cycle, often in an exaggerated manner?

A)   Cyclical.

B)   Counter-cyclical.

C)   Growth.

Correct answer is A)

A cyclical industry is typically characterized by profitability tracking the business cycle, often in an exaggerated manner.