A key determinant of the unemployment rate is
A) labour market unrest.
B) nominal interest rates.
C) aggregate consumption.
D) aggregate economic activity.
E) the participation rate.

Question

Quizplus · Accepted Answer

Aggregate economic activity, or the level of overall economic output, is a key determinant of the unemployment rate. When economic activity is low, businesses may reduce their workforce or may not hire as many new employees, leading to higher rates of unemployment. Conversely, when economic activity is high, businesses may expand their workforce, leading to lower rates of unemployment.

A Key Determinant of the Unemployment Rate Is