According to classical economists,in recessions,not only does the unemployment rate increase,so does the
A)interest rate.
B)level of fiscal stimulus.
C)natural rate of unemployment.
D)level of potential output.

Question

Quizplus · Accepted Answer

According to classical economists, in recessions the natural rate of unemployment increases. This is because in a recession, there is a decrease in demand for goods and services, which leads to a decrease in production and employment. As a result, workers become unemployed and may remain unemployed for an extended period of time, which increases the natural rate of unemployment. The other options (A, B, D) are not necessarily true according to classical economic theory.

According to Classical Economists,in Recessions,not Only Does the Unemployment Rate