ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A positive unemployment rate-one more than zero percent-is fully compatible with full employment because at full employment, Unemployment includes frictional unemployment, which is always positive because people are transitioning to new jobs. Businesses continue to lay-off workers as a result of the decrease in demand.

Detailed explanation-2: -Cyclical Unemployment During an economic downturn, a shortfall of demand for goods and services results in a lack of jobs being available for those who want to work. Businesses experiencing weaker demand might reduce the amount of people they employ by laying off existing workers, or hiring fewer new workers.

Detailed explanation-3: -Coincident indicators are analyzed and used as they occur. These are key numbers that have a substantial impact on the overall economy. Personal income is a coincident indicator of economic health.

Detailed explanation-4: -Deflation means that the price level is falling, whereas with inflation overall prices are rising. Deflation is undesirable because the falling prices mean that incomes are also falling, which reduces spending, output, employment, and, in turn, the price level (a downward spiral).