Question

Which of the following is correct? Question 2 options: Short run fluctuations in economic activity happen only in developing countries. During economic contractions most firms experience rising sales. Recessions come at regular intervals and are easy to predict.

Answer 1

Complete Question:

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 generally rises.

Answer:

d. When real GDP falls, the rate of unemployment generally rises.

Explanation:

Real Gross Domestic Products (GDP) measures economic activity and income in a particular country.

Consequently, when real Gross Domestic Products (GDP) falls, the rate of unemployment generally rises because the total market value of goods and services in that country has fallen.