ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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GDP is increasing, unemployment is increasing, and inflation is decreasing.
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GDP is increasing, unemployment is decreasing, and inflation is increasing.
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GDP is decreasing, unemployment is decreasing, and inflation is increasing.
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GDP is decreasing, unemployment is decreasing, and inflation is decreasing.
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Detailed explanation-1: -During an economic expansion, economy-wide employment, incomes, industrial production, and sales all tend to increase alongside the rising real GDP.
Detailed explanation-2: -Understanding Economic Expansion From a macro-perspective, GDP rises, disposable income per capita rises, and unemployment rates shrink due to a large number of job opportunities. A peak occurs when expansion reaches its climax. With a large sum of demand for goods, inflation occurs where costs begin to increase.
Detailed explanation-3: -The long arm of Okun’s law Proposed by economist Arthur Okun in 1962, it basically states that if GDP grows rapidly the unemployment rate declines, if growth is very low or neg-ative the unemployment rate rises, and if growth equals potential the unemploy-ment rate remains unchanged.
Detailed explanation-4: -The Phillips Curve This economic concept suggests that inflation and unemployment are inversely related. As such, it states that inflation is ushered into the economy by growth and expansion. According to Phillips’ theory, this cuts the unemployment rate since expansion leads to job growth.