A decrease in aggregate demand and the subsequent cutbacks in production lead to
a. frictional unemployment.
b. cyclical unemployment.
c. cost-push unemployment.
d. structural unemployment.
2.Which of the following is most indicative of a recession?
Answer a. a decline in unemployment
b. a rise in inflation
c. a decline in real GDP
d. an increase in the interest rate
3.
In a dynamic economy under ideal conditions,
Answer a. the unemployment rate should be near zero.
b. some unemployment would be present due to workers temporarily being out of work while changing jobs.
c. unemployment would tend to move upward slightly as prices increased.
d. unemployment would tend to move slightly downward as unemployment compensation benefits increased.

