The impact of recession on real GDP and unemployment .

Question

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Answer 1

Question

Chapter 23, Problem 1CQQ

To determine

The impact of recession on real GDP and unemployment.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'c' is correct.

Explanation of Solution

The recession is an important part of the business cycle in the economy. It is the movement of the economy from the highest peak point of economic boom towards the lowest point of economic depression. The economy produces various types of final goods and services in a financial year and the sum value of all the final goods and services produced within the political boundary in a financial year is known as the Gross Domestic Product (GDP) of an economy.

Option (c):

The recession is a movement of economy from economic boom towards the economic depression. When the economic recession takes place, the firms would reduce their output due to the lower aggregate demand in the economy. As a result of this, the firms would lay off their excess workers and the unemployment in the economy would rise substantially. Thus the reduction in the total final product of the economy leads to the reduction in the real GDP of the economy. Thus, option 'c' is correct.

Option (a):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the real GDP would rise in the economy, option 'a' is incorrect.

Option (b):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the unemployment would fall in the economy, option 'b' is incorrect.

Option (d):

The reduction in the output of the firms due to lower aggregate demand leads to the fall in the real GDP during the period of recession. But the reduction in output leads to the layoff of the workers in the firms due to lower production which increases unemployment in the economy. Thus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Recession: It is the movement of the economy from its highest peak point of growth towards the lowest point of depression in the business cycle. Thus, it is a downward movement of economy from peak to depression.

GDP: It is the money value of all the final goods and services produced within the political boundary of an economy in a financial year.

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Students have asked these similar questions

What is the relationship between the price level and the following components of aggregate demand? a. There is (a negative/ no / a positive) relationship between the price level and consumption. b. There is (a negative/no/ a positive) relationship between the price level and investment. c. There is (a negative/no/ a positive) relationship between the price level and government spending. d. There is (a negative/no/ a positive) relationship between the price level and net exports.

An economy is at full employment. Which of the following events can create a recessionary gap? A.An increase in foreign income. B.An increase in government spending. C.An increase in taxes. D.A decrease in nominal wages.

1. Aggregate demand curves slope downwards for each of the following reasons EXCEPT A. The wealth effect: As the price level falls, the buying power of people's savings increases and induces them to spend more. B. The substitution effect: As the price level falls, people buy more of the cheaper goods and less of other goods. C. The interest rate effect: As prices for outputs rise, it costs more to make the same purchases, driving up the demand for money, raising interest rates and reducing investment spending. D. The foreign price effect: As the price level falls, U.S. become more attractive to foreigners and domestic residents, increasing net export spending.

Answer 2

Question

Chapter 23, Problem 1CQQ

To determine

The impact of recession on real GDP and unemployment.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'c' is correct.

Explanation of Solution

The recession is an important part of the business cycle in the economy. It is the movement of the economy from the highest peak point of economic boom towards the lowest point of economic depression. The economy produces various types of final goods and services in a financial year and the sum value of all the final goods and services produced within the political boundary in a financial year is known as the Gross Domestic Product (GDP) of an economy.

Option (c):

The recession is a movement of economy from economic boom towards the economic depression. When the economic recession takes place, the firms would reduce their output due to the lower aggregate demand in the economy. As a result of this, the firms would lay off their excess workers and the unemployment in the economy would rise substantially. Thus the reduction in the total final product of the economy leads to the reduction in the real GDP of the economy. Thus, option 'c' is correct.

Option (a):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the real GDP would rise in the economy, option 'a' is incorrect.

Option (b):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the unemployment would fall in the economy, option 'b' is incorrect.

Option (d):

The reduction in the output of the firms due to lower aggregate demand leads to the fall in the real GDP during the period of recession. But the reduction in output leads to the layoff of the workers in the firms due to lower production which increases unemployment in the economy. Thus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Recession: It is the movement of the economy from its highest peak point of growth towards the lowest point of depression in the business cycle. Thus, it is a downward movement of economy from peak to depression.

GDP: It is the money value of all the final goods and services produced within the political boundary of an economy in a financial year.

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Answer 3

Question

Chapter 23, Problem 1CQQ

To determine

The impact of recession on real GDP and unemployment.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'c' is correct.

Explanation of Solution

The recession is an important part of the business cycle in the economy. It is the movement of the economy from the highest peak point of economic boom towards the lowest point of economic depression. The economy produces various types of final goods and services in a financial year and the sum value of all the final goods and services produced within the political boundary in a financial year is known as the Gross Domestic Product (GDP) of an economy.

Option (c):

The recession is a movement of economy from economic boom towards the economic depression. When the economic recession takes place, the firms would reduce their output due to the lower aggregate demand in the economy. As a result of this, the firms would lay off their excess workers and the unemployment in the economy would rise substantially. Thus the reduction in the total final product of the economy leads to the reduction in the real GDP of the economy. Thus, option 'c' is correct.

Option (a):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the real GDP would rise in the economy, option 'a' is incorrect.

Option (b):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the unemployment would fall in the economy, option 'b' is incorrect.

Option (d):

The reduction in the output of the firms due to lower aggregate demand leads to the fall in the real GDP during the period of recession. But the reduction in output leads to the layoff of the workers in the firms due to lower production which increases unemployment in the economy. Thus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Recession: It is the movement of the economy from its highest peak point of growth towards the lowest point of depression in the business cycle. Thus, it is a downward movement of economy from peak to depression.

GDP: It is the money value of all the final goods and services produced within the political boundary of an economy in a financial year.

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Answer 4

Question

Chapter 23, Problem 1CQQ

To determine

The impact of recession on real GDP and unemployment.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'c' is correct.

Explanation of Solution

The recession is an important part of the business cycle in the economy. It is the movement of the economy from the highest peak point of economic boom towards the lowest point of economic depression. The economy produces various types of final goods and services in a financial year and the sum value of all the final goods and services produced within the political boundary in a financial year is known as the Gross Domestic Product (GDP) of an economy.

Option (c):

The recession is a movement of economy from economic boom towards the economic depression. When the economic recession takes place, the firms would reduce their output due to the lower aggregate demand in the economy. As a result of this, the firms would lay off their excess workers and the unemployment in the economy would rise substantially. Thus the reduction in the total final product of the economy leads to the reduction in the real GDP of the economy. Thus, option 'c' is correct.

Option (a):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the real GDP would rise in the economy, option 'a' is incorrect.

Option (b):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the unemployment would fall in the economy, option 'b' is incorrect.

Option (d):

The reduction in the output of the firms due to lower aggregate demand leads to the fall in the real GDP during the period of recession. But the reduction in output leads to the layoff of the workers in the firms due to lower production which increases unemployment in the economy. Thus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Recession: It is the movement of the economy from its highest peak point of growth towards the lowest point of depression in the business cycle. Thus, it is a downward movement of economy from peak to depression.

GDP: It is the money value of all the final goods and services produced within the political boundary of an economy in a financial year.

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Answer 5

Chapter 23, Problem 1CQQ

To determine

The impact of recession on real GDP and unemployment.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'c' is correct.

Explanation of Solution

The recession is an important part of the business cycle in the economy. It is the movement of the economy from the highest peak point of economic boom towards the lowest point of economic depression. The economy produces various types of final goods and services in a financial year and the sum value of all the final goods and services produced within the political boundary in a financial year is known as the Gross Domestic Product (GDP) of an economy.

Option (c):

The recession is a movement of economy from economic boom towards the economic depression. When the economic recession takes place, the firms would reduce their output due to the lower aggregate demand in the economy. As a result of this, the firms would lay off their excess workers and the unemployment in the economy would rise substantially. Thus the reduction in the total final product of the economy leads to the reduction in the real GDP of the economy. Thus, option 'c' is correct.

Option (a):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the real GDP would rise in the economy, option 'a' is incorrect.

Option (b):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the unemployment would fall in the economy, option 'b' is incorrect.

Option (d):

The reduction in the output of the firms due to lower aggregate demand leads to the fall in the real GDP during the period of recession. But the reduction in output leads to the layoff of the workers in the firms due to lower production which increases unemployment in the economy. Thus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Recession: It is the movement of the economy from its highest peak point of growth towards the lowest point of depression in the business cycle. Thus, it is a downward movement of economy from peak to depression.

GDP: It is the money value of all the final goods and services produced within the political boundary of an economy in a financial year.

Answer 6

Chapter 23, Problem 1CQQ

To determine

The impact of recession on real GDP and unemployment.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'c' is correct.

Explanation of Solution

The recession is an important part of the business cycle in the economy. It is the movement of the economy from the highest peak point of economic boom towards the lowest point of economic depression. The economy produces various types of final goods and services in a financial year and the sum value of all the final goods and services produced within the political boundary in a financial year is known as the Gross Domestic Product (GDP) of an economy.

Option (c):

The recession is a movement of economy from economic boom towards the economic depression. When the economic recession takes place, the firms would reduce their output due to the lower aggregate demand in the economy. As a result of this, the firms would lay off their excess workers and the unemployment in the economy would rise substantially. Thus the reduction in the total final product of the economy leads to the reduction in the real GDP of the economy. Thus, option 'c' is correct.

Option (a):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the real GDP would rise in the economy, option 'a' is incorrect.

Option (b):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the unemployment would fall in the economy, option 'b' is incorrect.

Option (d):

The reduction in the output of the firms due to lower aggregate demand leads to the fall in the real GDP during the period of recession. But the reduction in output leads to the layoff of the workers in the firms due to lower production which increases unemployment in the economy. Thus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Recession: It is the movement of the economy from its highest peak point of growth towards the lowest point of depression in the business cycle. Thus, it is a downward movement of economy from peak to depression.

GDP: It is the money value of all the final goods and services produced within the political boundary of an economy in a financial year.

Answer 7

Chapter 23, Problem 1CQQ

To determine

The impact of recession on real GDP and unemployment.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'c' is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The recession is an important part of the business cycle in the economy. It is the movement of the economy from the highest peak point of economic boom towards the lowest point of economic depression. The economy produces various types of final goods and services in a financial year and the sum value of all the final goods and services produced within the political boundary in a financial year is known as the Gross Domestic Product (GDP) of an economy.

Option (c):

The recession is a movement of economy from economic boom towards the economic depression. When the economic recession takes place, the firms would reduce their output due to the lower aggregate demand in the economy. As a result of this, the firms would lay off their excess workers and the unemployment in the economy would rise substantially. Thus the reduction in the total final product of the economy leads to the reduction in the real GDP of the economy. Thus, option 'c' is correct.

Option (a):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the real GDP would rise in the economy, option 'a' is incorrect.

Option (b):

The recession will face a period where the households will reduce their consumption and the firms face lower demands in the economy. This leads to the reduction in the output of the economy and simultaneously reduces the GDP of the economy because the GDP is the sum value of all the final goods and services produced in the economy. So, the firms will lay off workers which rises the unemployment rate in the economy. Since the option explains that the unemployment would fall in the economy, option 'b' is incorrect.

Option (d):

The reduction in the output of the firms due to lower aggregate demand leads to the fall in the real GDP during the period of recession. But the reduction in output leads to the layoff of the workers in the firms due to lower production which increases unemployment in the economy. Thus, option 'd' is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Recession: It is the movement of the economy from its highest peak point of growth towards the lowest point of depression in the business cycle. Thus, it is a downward movement of economy from peak to depression.

GDP: It is the money value of all the final goods and services produced within the political boundary of an economy in a financial year.

Answer 13

Ch. 23.1 - Prob. 1QQ Ch. 23.2 - Prob. 2QQ Ch. 23.3 - Prob. 3QQ Ch. 23.4 - Prob. 4QQ Ch. 23.5 - Prob. 5QQ Ch. 23 - Prob. 1CQQ Ch. 23 - Prob. 2CQQ Ch. 23 - Prob. 3CQQ Ch. 23 - Prob. 4CQQ Ch. 23 - Prob. 5CQQ

The impact of recession on real GDP and unemployment .

Solution Summary: The author explains that recession is an important part of the business cycle in the economy.

The impact of recession on real GDP and unemployment.

Answer to Problem 1CQQ

Explanation of Solution

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Chapter 23 Solutions