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Which of the following is correct?

A. When real GDP falls, the rate of unemployment rises.
B. Recessions come at irregular intervals and are easy to predict.
C. During economic contractions, most firms experience rising profits.
D. Short-run fluctuations in economic activity happen only in developing countries.



Answer :

GinnyAnswer

Final answer:

When real GDP falls, unemployment rates tend to rise due to the inverse relationship between economic activity and employment levels.


Explanation:

When real GDP falls, the rate of unemployment rises. This statement is correct as there is a strong relationship between economic activity and unemployment rates. During recessions, which are characterized by decreases in real GDP, unemployment rates often increase.


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