Which of the Following Explains Why Fluctuations in Real GDP

question 163

Multiple Choice

Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?

• A)Services have become a smaller fraction of GDP since the 1950s.
• B)Unemployment insurance and other government transfer programs are more prevalent since the 1950s.
• C)The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s.
• D)both B and C

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Definitions:

Higher Level of Unemployment

A state in which there is a larger than usual number of people without jobs, indicating increased job scarcity or economic downturns.

Business Cycle

The fluctuations in economic activity characterized by periods of economic expansion and contraction over time.

Economic Activity

The actions that involve the production, distribution, and consumption of goods and services in an economy.

Unemployment and Inflation

Two key indicators in economics, where unemployment measures the percentage of the workforce that is jobless, and inflation indicates the rate at which the general level of prices for goods and services is rising.