If an economy has just had a serious recession but real GDP is expanding once again, we can expect the unemployment rate to:
A) fall immediately.
B) rise immediately.
C) rise if people who were previously discouraged enter the work force but do not find jobs right away.
D) fall if people who were previously discouraged enter the work force but do not find jobs right away.

Question

Quizplus · Accepted Answer

After a recession ends and the economy starts to rebound, the unemployment rate may initially rise as people who were previously discouraged to look for work start entering the labor force again. However, it may take some time for them to find jobs, which means they will be counted as unemployed. Therefore, it is likely that the unemployment rate will rise initially before eventually falling as the economy continues to recover.

If an Economy Has Just Had a Serious Recession but Real