All else equal, what is likely to happen to the unemployment rate during a recession?
a. It increases as real GDP increases.
b. It decreases as real GDP remains the same.
c. It increases as real GDP decreases.
d. It decreases as cyclical unemployment decreases.
e. It decreases as real GDP decreases.
C
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Goods that can be produced at a constant or very gently rising opportunity cost have
A) an elastic demand. B) an inelastic demand. C) an inelastic supply. D) an elastic supply. E) a unit elastic demand.
The Fed uses operating targets as well as intermediate targets because
A) the Federal Reserve Act of 1913 requires it to do so. B) the Fed controls intermediate targets only indirectly. C) the public is much more unfamiliar with the variables used as operating targets, so for policy to be effective intermediate targets must also be announced. D) if one set of targets proves ineffective in attaining policy goals, the other set is available.