A period of unemployment due to recession will ?
Correct answer: B. reduce a worker's current income but not necessarily their permanent income
- A. increase a worker's current income and permanent income
- B. reduce a worker's current income but not necessarily their permanent income
- C. affect neither the current nor the permanent income of a worker
- D. reduce a worker's permanent income but not their current income
Explanation
A recession directly lowers earnings during the unemployment period, so current income falls. Permanent income may remain unchanged if the unemployment is temporary and does not alter expected lifetime earnings.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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