According to mainstream business cycle theory, a. the money wage rate is sticky and consequently if aggregate demand grows faster than potential gdp, an inflationary gap emerges b. the money wage rate is sticky and consequently if aggregate demand grows faster than potential gdp, a recessionary gap emerges c. in a business cycle expansion, short-run aggregate supply increases by more than aggregate demand d. the economy is always at full employment

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.