ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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an increase in real wages
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an increase in production
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and increase in the GDP growth rate
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an increase in the unemployment rate
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Detailed explanation-1: -With lower demand for goods and services, firms start laying off workers and at the same time refrain from raising prices. So unemployment rises and inflation falls during recessions.
Detailed explanation-2: -Cyclical unemployment is the unemployment associated with the ups and downs of the business cycle. During recessions, cyclical unemployment increases and drives up the unemployment rate.
Detailed explanation-3: -An economic crash or steep recession might increase the natural unemployment rate if workers lose the skills necessary to find full-time work or if certain businesses close and are unable to reopen due to excessive loss of revenue. Economists call this effect “hysteresis.”
Detailed explanation-4: -Economic recessions can be caused by many different elements, including loss of consumer confidence, high interest rates, a stock market crash, and asset bubbles bursting. Most events that will cause the economy to slow down can also lead to a recession if left unchecked.