Explain the relationship between business cycles in different countries. What will be an ideal ...

Answer to q. 1

Business cycles across countries are related but not perfectly synchronized. Since countries trade with each other, if one country enters a recession this will reduce exports from other countries to the recessionary country and will have a negative effect on real GDP in the exporting countries. Also, macroeconomic shocks can be global. Oil price shocks often impact many nations at the same time, as did the financial crisis of 2007-2008. Due to factors such as these, business cycles appear to be related across countries, and in instances of global shocks, fairly synchronized as well.

Answer to q. 2

D

Answer to q. 3

C