Future Business Leaders of America (FBLA) Business Management Practice Test

Which statement is true regarding economic growth and employment?

1. Economic growth leads to increased unemployment.

2. Economic growth typically results in higher levels of employment.

3. Economic growth has no effect on employment.

4. Higher employment leads to economic decline.

The correct answer is: Economic growth typically results in higher levels of employment.

Economic growth typically results in higher levels of employment because as an economy grows, businesses often expand to meet increasing demand for goods and services. This expansion can lead to the creation of new jobs, as companies require more workers to support their additional production, sales, and operations. When economic activity increases, consumer spending generally rises, prompting businesses to invest more in their workforce. This cycle helps to lower unemployment rates and often results in higher wages as companies compete to attract and retain qualified employees. A growing economy creates a positive feedback loop where increased employment contributes further to economic activity as employed individuals have more disposable income to spend. This relationship highlights the importance of economic policies aimed at fostering growth, as they can lead to substantial benefits in terms of job creation and reduced unemployment.