Which of the following statements is the most accurate about the behaviour of the unemployment rate in Canada over the last half of the 20th century?
A) Both the cyclical behaviour of the unemployment rate and the trend behaviour of the unemployment rate are well explained by changes in the level of aggregate economic activity.
B) The cyclical behaviour of the unemployment rate is well explained by changes in the level of aggregate economic activity, and the trend behavior of the unemployment rate is well explained by demographic factors.
C) the cyclical behaviour of the unemployment rate is well explained by demographic factors, and the trend behaviour of the unemployment rate is well explained by changes in the level of aggregate economic activity.
D) Both the cyclical behaviour of the unemployment rate and the trend behaviour of the unemployment rate are well explained by demographic factors.
E) Both the cyclical behaviour of the unemployment rate and the trend behaviour of the unemployment rate are not well explained by demographic factors.

Question

Quizplus · Accepted Answer

The cyclical behavior of the unemployment rate is well explained by changes in the level of aggregate economic activity, as fluctuations in economic growth directly impact the job opportunities available to workers. However, the trend behavior of the unemployment rate is also impacted by demographic factors such as aging populations and changes in labor force participation rates. Therefore, option B is the most accurate statement.

Which of the Following Statements Is the Most Accurate About