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Course: Macroeconomics > Unit 2

Lesson 7: Business cycles

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Business cycles

Google Classroom

The graph below shows a business cycle for Country Z.

Which of the following most likely describes what Country Z experiences as it moves from point A to point B?

(Choice A)
An increase in unemployment and an inward shift of its PPC
(Choice B)
Rising output and a fall in cyclical unemployment
(Choice C)
Falling unemployment and a movement from a point inside its PPC to a point closer to its PPC
(Choice D)
Rising unemployment and a movement from a point on its PPC to a point inside its PPC
(Choice E)
A negative output gap and an increase in the natural rate of unemployment