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.