During a Recession, People May Drop Out of the Labor

question 76

Multiple Choice

During a recession, people may drop out of the labor force because they are unable to find a job. All else being equal, this causes

• A)no change in the unemployment rate.
• B)the unemployment rate to increase.
• C)the unemployment rate to decrease.
• D)a decrease in the working-age population.
• E)an increase in the employment-to-population ratio.

---

Definitions:

Absorption Costing

An approach in accounting where the cost of a product is determined by including direct materials, direct labor, and all manufacturing overhead costs, whether variable or fixed.

Unit Product Cost

The total cost to produce one unit of product, including direct materials, direct labor, and allocated overhead.

Contribution Margin Ratio

A financial metric that shows what percentage of sales revenue is not consumed by variable costs and therefore contributes to covering fixed costs.

Segment Margin

The profit or loss generated by a particular segment of a business, after accounting for direct and indirect costs.