During a Recession, Which of the Following Will Be True

question 158

Multiple Choice

During a recession, which of the following will be true?

• A) The actual rate of unemployment will be lower than the natural rate.
• B) Actual GDP will be lower than potential GDP.
• C) The employment/population ratio will increase substantially.
• D) Actual inflation will be higher than was anticipated.

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Definitions:

Coin Tosses

A simple randomness process used for deciding between two equally likely outcomes by flipping a coin.

Hindsight Bias

The inclination to think, upon discovering a result, that it was predictable in hindsight, referred to as the "knew-it-all-along" effect.

Psychological Theories

Frameworks for understanding mental processes and behavior through systematized concepts and propositions.

Common Sense

Practical judgment concerning everyday matters, or a basic ability to perceive, understand, and judge that is shared by ("common to") nearly all people.