What Is the Likely Consequence of an Unemployment Rate Falling

question 5

Multiple Choice

What is the likely consequence of an unemployment rate falling below the rate at which "full employment" is achieved?

• A)The threat of recession.
• B)Increased inflationary pressures.
• C)An increase in discouraged workers.
• D)None of the choices are correct.

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Definitions:

Recession

A noticeable drop in economic activity affecting the entire economy, enduring for longer than several months, and commonly observed in metrics such as real GDP, real income, employment, industrial output, and wholesale-retail transactions.

Aggregate Demand

Whole demand for goods and services across an economic landscape, appraised at a given overall price point throughout a defined timeframe.

Household Saving

The portion of a household's disposable income that is not spent on current consumption but is set aside for future use.

Consumption

The use of goods and services by households, constituting one of the primary components of GDP and an important indicator of economic health.