Rising unemployment signals a recession with falling demand

Steps:

• Rising unemployment reduces consumer and business spending, slowing economic growth.
• Slower growth means less demand for goods and services, putting downward pressure on prices.
• This leads to falling inflation as the economy contracts.
• Thus, both economic growth and inflation decline together.

Why A is correct:

• In Okun's law, rising unemployment correlates with falling GDP growth, and reduced demand causes disinflation per the Phillips curve short-run tradeoff.

Why the others are wrong:

• B: Falling growth with rising inflation indicates stagflation, not typical of rising unemployment alone.
• C: Rising growth contradicts unemployment increases, which signal economic contraction.
• D: Rising growth and inflation suggest economic expansion with low unemployment.

Final answer: A