An increase in ________ will cause the ________ to fall by a larger percentage if firms aren't holding excess labor.

Question

Quizplus · Accepted Answer

If there is an increase in output and firms aren't holding excess labor, they will need to hire more workers which will lead to a decrease in the unemployment rate. On the contrary, an increase in inflation rate may cause the GDP to fall, but the decrease may not be as significant as the effect of an increase in output on unemployment rate. Therefore, option B is the most appropriate choice.

An Increase in ________ Will Cause the ________ to Fall

An Increase in Will Cause the to Fall