Which of the following is correct concerning recessions?

a. They are associated with comparatively large increases in investment spending.

b. They tend to be associated with rising unemployment rates.

c. They come at fairly regular and predictable intervals.

d. They are any period when real GDP growth is less than average.

Question

Business

Rene

20 December, 16:54

Which of the following is correct concerning recessions?

a. They are associated with comparatively large increases in investment spending.

b. They tend to be associated with rising unemployment rates.

c. They come at fairly regular and predictable intervals.

d. They are any period when real GDP growth is less than average.

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Answers (1)

Know the Answer?

Keaton Hammond · Answer 1

The answer is B They tend to be associated with rising unemployment rates.

Explanation:

Recessions are defined in economics as to consecutive quarters where real GDP is negative. So there must be two periods of comparison so D is not true as is not compared with average GDP. Recession are not predictable and can be associated to undetermined or nation wide events difficult to predict like war or falls of stock exchanges markets. In contrary, investment tends to decline and not increase in recessions as capital flows of investors tend to leave the country to other non risky assets. outside. However, as production is lower also the demand of labor by companies tends to be lower also, which produces generally higher levels of unemployment.