Macroeconomic conditions affect the decisions firms and families make. After gra

Question

Macroeconomic conditions affect the decisions firms and families make. After graduation, a college student might enter the job market during an economic expansion but apply for graduate school during a recession because A. students only go to graduate schools when they are disappointed in their professional life. B. graduate schools usually offer tuition discounts during an expansion. C. the probability of finding a job is lower during economic expansion and higher during recession. D. the probability of finding a job is higher during economic expansion and lower during recession.

Explanation / Answer

Correct option is (D).

During expansion, output, income and employment are high, therefore it is relatively easier to find a job, and students prefer to secure a job than to study further. In contrast, during recession, income and employment are low, and unemployment rises, therefore it is more difficult to find a job, and students prefer to study further since they cannot easily secure a job.

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