During a recession, we generally see
a. real GDP rising and unemployment rising
b. real GDP falling and unemployment rising
c. real GDP rising and inflation rising
d. real GDP rising and inflation staying stable
Answer: b. real GDP falling and unemployment rising
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When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism, the destruction of the trails is an example of
A) an external cost. B) a private cost. C) a government cost. D) an external benefit. E) None of the above answers is correct.
The Monetary Control Act of 1980:
a. extended the Fed's authority to impose required-reserve ratios on all depository institutions. b. excluded the required-reserve ratios as an instrument of short-term policy. c. provided the Fed with the authority to use open market operations. d. all of the above. e. none of the above.
Price ceilings and price floors that are binding
a. are desirable because they make markets more efficient and more fair. b. cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. c. can have the effect of restoring a market to equilibrium. d. are imposed because they can make the poor in the economy better off without causing adverse effects.
Suppose you are a risk-neutral manager attempting to hire a new sales manager. All of the workers in the market have the same ability to manage and sell, but they differ with respect to the wage at which they are willing to work for your company. The market for sales managers is composed of two types of individuals: 35 percent are willing to work for $50,000 and 65 percent are willing to work for $75,000. The first interviewee is only willing to work for $75,000. The expected benefit from an additional search is:
A. $26,250. B. $8,750. C. $16,250. D. $32,500.