The measured unemployment rate does not rise as much as one might expect when output decreases because, as the economy contracts

Question

Quizplus · Accepted Answer

When the economy contracts and output decreases, people may become discouraged and stop looking for work, therefore, leaving the labor force. This means that, although there may be fewer jobs available, there are also fewer people actively seeking employment, which can cause the unemployment rate to remain relatively stable.

The Measured Unemployment Rate Does Not Rise as Much as One