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Businesses whose fortunes are closely tied to the rate of economic growth, such as house-builders and overseas tour operators, are referred to in the chapter as:
ACounter-cyclical businesses
BDefensive businesses
CCyclical businesses
DStable utility businesses
Answer & Solution
Correct answer: C. Cyclical businesses
1. The chapter says firms closely linked to the rate of economic growth are called cyclical businesses.
2. Examples include fashion retailers, house-builders, restaurants, advertising and overseas tour operators.
3. They see strong demand in booms and sharp drops in slumps.
4. So the correct choice is cyclical businesses.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 5 "Business Cycles", p.10_
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