The four phases of the business cycle are peak, recession, trough, and expansion. Business cycle lengths vary. Seasonal variations and long run trends complicate the measurement of the business cycle because people are not prepared for the shift in the cycle since they are unexpected. The business cycle affects output and employment in capital goods industries and consumer durable goods industries more severely than in industries producing consumer nondurables because the quantity and quality of purchases of nondurables will decline, but not as much as will purchases of capital goods and consumer durables.

FALSE

Explanation:

It is False that Seasonal variations and long run trends complicate the measurement of the business cycle because people are not prepared for the shift in the cycle since they are unexpected.

Seasonal variations are recurring fluctuations that happen at regular and predictable periods every calendar year. Hence they are recurring and expected each year in defined months of the year

Businesses ought to expect to experience seasonal fluctuations in their product demand because an ice-cream producer should expect to sell more in summer while umbrella producers will sell more during the rainy season. This ability of identification of the impact of seasonal influences and the purchasing habits assists in managing seasonal variations.

One of the methods that businesses use to accommodate seasonal variations in product demand forecasting is Exponential soothing.

Exponential soothing as a tool of product demand forecasting purports that businesses should first base their forecasts on general demand, before factoring in seasonal influences.

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