The Primary Reason Inflow Rates to Unemployment Decline Slowly Following

question 31

Multiple Choice

The primary reason inflow rates to unemployment decline slowly following a surge in job destruction is that

• A) firms fail to perceive the end of the recession in a timely fashion and continue laying off workers.
• B) decreased spending by terminated workers reverberates throughout the economy.
• C) displaced workers may take temporary work, forcing themselves to become unemployed again shortly.
• D) workers expect the recession to continue and fail to search soon enough for new employment.
• E) b and c.

---

Definitions:

Short-run

A period of time in which at least one input is fixed and cannot be changed, affecting the capacity to adjust production levels.

Long-run Equilibrium

A state in which all factors of production and inputs can be fully adjusted, and there are no fixed variables, resulting in market supply equalling market demand.

Marginal Cost

Marginal cost is the change in total production cost that comes from making or producing one additional unit of a good.

Perfectly Competitive

Refers to a market structure where there are many buyers and sellers, all producing homogenous products, with no single participant having the power to influence the market price.