The Unemployment Rate Does Not Tend to Fall as Soon

question 210

Multiple Choice

The unemployment rate does not tend to fall as soon as the economy pulls out of a recession. Which of the following best explains this?

• A) Firms are holding excess labor, so as the economy pulls out of the recession, firms do not need to hire new workers immediately.
• B) Firms' optimism about the state of the economy increased prior to the economy pulling out of the recession, so firms increased their employment earlier.
• C) Firms are not able to find qualified workers to fill the job vacancies.
• D) During recessionary periods, firms switch to more capital-intensive production techniques, so they do not need to increase employment as the economy pulls out of the recession.

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Definitions:

Minimum Price

The lowest legally allowed price at which a good or service can be sold, often set to protect producers or promote fair trade.

Scenario 1-3

A hypothetical or real situation used to illustrate a particular case or outcome, typically numbered for organization.

Marginal Cost

Marginal cost is the change in total cost that arises when the quantity produced is incremented by one unit; it's the cost of producing one more unit of a good.