Which of the following will most likely occur during the recessionary phase of a business cycle?
A) Real GDP rises, and the unemployment rate falls.
B) Real GDP declines, and the rate of inflation rises.
C) The sales of most businesses decline, and the unemployment rate rises.
D) Inflation rises, and employment/population ratio falls.

Question

Quizplus · Accepted Answer

During the recessionary phase of a business cycle, there is a decline in economic activity resulting in decreased demand for goods and services. As a result, the sales of most businesses decline, leading to lower profits and reduced employment opportunities. This leads to a rise in the unemployment rate. Therefore, choice C is the most likely outcome during a recessionary phase.

Which of the Following Will Most Likely Occur During the Recessionary