Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Higher aggregate demand leads to lower unemployment
B
Higher aggregate demand leads to higher unemployment
C
There is no relationship
D
Lower aggregate demand leads to lower unemployment
Understanding the Answer
Let's break down why this is correct
Answer
Aggregate demand is the total amount of goods and services that people in an economy want to buy. When aggregate demand is high, businesses need to produce more to meet this demand, which often leads them to hire more workers. This increase in hiring can lower unemployment, as more people find jobs. Conversely, if aggregate demand falls, businesses may cut back on production and lay off workers, leading to higher unemployment. For example, if a new product becomes popular and more people want to buy it, a company might hire more staff to keep up with orders, reducing unemployment in the process.
Detailed Explanation
When people want to buy more goods and services, businesses need to hire more workers. Other options are incorrect because This idea suggests that when people buy more, companies would fire workers; This option says there is no link between demand and jobs.
Key Concepts
Unemployment rate
Topic
Aggregate Demand and Unemployment
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.