CFA Practice Question

CFA Practice Question

Which of the following usually occurs at the beginning of an economic recovery (after a recession)?
A. Profit margin decreases.
B. Unit labor costs increase slowly or decrease.
C. Unit labor costs increase greatly.
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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