During a recession, which of the following will be true?
A) The actual rate of unemployment will be lower than the natural rate.
B) Actual GDP will be lower than potential GDP.
C) The employment/population ratio will increase substantially.
D) Actual inflation will be higher than was anticipated.

Question

Quizplus · Accepted Answer

During a recession, there is a decline in aggregate demand, leading to a decrease in output and employment. This means that actual GDP will be lower than potential GDP, which is the level of output that the economy can produce at full employment without inflationary pressures.

During a Recession, Which of the Following Will Be True