Comparing the Unemployment Rate and the Business Cycle We See

question 4

Multiple Choice

Comparing the unemployment rate and the business cycle we see that

• A) higher unemployment rates are the cause of most business cycles.
• B) there is virtually no relationship between the business cycle and the unemployment rate.
• C) the unemployment rate eventually falls during expansions and rises during recessions.
• D) the unemployment rate generally increases during expansions and generally decreases during recessions.

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Definitions:

International Fisher Effect

A theory stating that the difference in nominal interest rates between two countries is equal to the expected change in the exchange rate between the two countries' currencies.

Absolute Purchasing Power Parity

The concept that, if transportation and transaction charges are eliminated, the price of identical items should be equivalent across countries when converted into a uniform currency.

Exchange Rate

The price at which one currency can be exchanged for another currency, influencing international trade and investment.

Bushel

A unit of volume that is used in the United States for measuring agricultural commodities, including grains and fruits.