3. Which of the following are consistent with the observed relationship between growth in real GDP and changes in the unemployment rate as shown in Figure 14-5? Which are not?
A rise in the unemployment rate accompanies a fall in real GDP.
An exceptionally strong business recovery is associated with a greater percentage of the labor force being employed.
Negative real GDP growth is associated with a fall in the unemployment rate.
Both parts a and b are consistent with the relationship, illustrated in Figure 14-5, between above-average or below-average growth in real GDP and changes in the unemployment rate: during years of above-average growth, the unemployment rate falls, and during years of below-average growth, the unemployment rate rises. However, part c is not consistent: it implies that a recession is associated with a fall in the unemployment rate, which is correct.