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

Question

Quizplus · Accepted Answer

The unemployment rate is primarily influenced by the level of aggregate economic activity, which is typically measured by gross domestic product (GDP). When the economy is expanding, businesses are hiring more workers, which reduces unemployment. Conversely, when the economy is contracting, businesses are laying off workers, which increases unemployment. While the other answer choices may have some effect on the unemployment rate, they are not as significant as aggregate economic activity.

A Key Determinant of the Unemployment Rate Is