ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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GDP is decreasing and people are losing their jobs.
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GDP is increasing and wages are increasing.
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GDP is decreasing and businesses are selling more goods.
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None of the above
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Detailed explanation-1: -If GDP is falling, then the economy is shrinking-bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession, which can mean pay freezes and lost jobs.
Detailed explanation-2: -The downward slope of the business cycle is called economic contraction. A contraction is a period when economic output declines. During this phase, the economy is producing fewer goods and services than it did before. When fewer goods and services are produced, fewer resources are used by firms-including labor.
Detailed explanation-3: -Indicated by weak output and rising unemployment rates A recession can be defined as a sustained period of weak or negative growth in real GDP (output) that is accompanied by a significant rise in the unemployment rate. Many other indicators of economic activity are also weak during a recession.
Detailed explanation-4: -In particular, a recession is usually associated with a decline of 2 percent in GDP. In the case of severe recessions, the typical output cost is close to 5 percent. The fall in consumption is often small, but both industrial production and investment register much larger declines than that in GDP.