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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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically. 2. Consider the following table of long-run total costs for three different firms: Quantity Total Cost ($) Firm A Firm B Firm C 1 60 11 21 2 70 24 34 3 80 39 49 4 90 56 66 5 100 75 85 6 110 96 106 7 120 119 129 Does each of these firms experience economies of scale or diseconomies of scale? Explain your answer with necessary calculations.

Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer.State the condition for a consumer's utility maximizing choice and illustrate graphically.

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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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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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