We observe the duration of unemployment rising and wage rates falling. It is likely that

Question

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The duration of unemployment rising and wage rates falling indicate a decrease in aggregate demand, which causes a slowdown in economic activity and can result in businesses reducing employment and wage rates. Expansionary fiscal policies could help boost demand, but the fact that unemployment is rising suggests that the policies haven't taken effect yet, so we cannot choose option A. Summer arriving does not have a direct impact on unemployment and wage rates, so we can eliminate option B. An increase in aggregate supply would lead to lower prices rather than lower wages, so option D is also incorrect.

We Observe the Duration of Unemployment Rising and Wage Rates