In macroeconomic theories of national-income determination,short-run changes in real GDP are typically associated with changes in ________ unemployment.

Question

Quizplus · Accepted Answer

Short-run changes in real GDP are typically associated with changes in cyclical unemployment, which happens due to fluctuations in the business cycle. This type of unemployment occurs when there is a shortfall in aggregate demand, causing businesses to reduce production and lay off workers. Conversely, when aggregate demand increases, businesses hire more workers to increase production, resulting in a decrease in cyclical unemployment.

In Macroeconomic Theories of National-Income Determination,short-Run Changes in Real GDP