Which of the following is correct?
A) Short run fluctuations in economic activity happen only in developing countries.
B) During economic contractions most firms experience rising profits.
C) Recessions come at irregular intervals and are easy to predict.
D) When real GDP falls, the rate of unemployment rises.

Question

Quizplus · Accepted Answer

This statement is correct as there is a negative correlation between real GDP and unemployment. When real GDP falls, businesses tend to reduce their workforce which, in turn, increases the rate of unemployment.

Which of the Following Is Correct