Answer to Question #278991 in Macroeconomics for Aarish

Question

Assuming that the UAE economy is in recession. What are the implications of this indicator? Why might this indicator be inaccurate

Answer 1

Solution:

The implications of recession include the following :

1. Higher levels of unemployment.
2. Lower wages and incomes.
3. Higher inequality and increase in relative poverty.
4. Increased government borrowing.
5. Permanently lost output.

The recession indicator may be wrong at times as it doesn't account for many other factors such as prices. The rate of unemployment may also be misleading.