A severe drought hits a country and reduces farm output by 50 percent.In the short run,this will ________ output and ________ employment.
A) decrease; decrease
B) decrease; increase
C) decrease; have no effect on
D) have no effect on; have no effect on
E) increase; increase

Question

Quizplus · Accepted Answer

The severe drought reduces farm output by 50 percent, which means that there is less production and therefore a decrease in output. With a decrease in output, there will likely be a decrease in demand for labor, which will lead to a decrease in employment. Therefore, both output and employment are expected to decrease in the short run.

A Severe Drought Hits a Country and Reduces Farm Output