Economic Recovery: Key Indicators and Trends

The Beginning of an Economic Recovery

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Question

Which of the following usually occurs at the beginning of an economic recovery (after a recession)?

Answers

A. Profit margin decreases.

B. Productivity decreases.

C. Unit labor costs increase slowly or decrease.

D. Unit labor costs increase greatly. C

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Explanations

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A. B. C. D.

Explanation

At the beginning of an economic recovery, capacity utilization increases from its low recession level. Workers do not yet ask for much higher wages, and productivity increases, leading to a decrease or only a slow increase in unit labor costs. Profit margin increases as a result of these trends.

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