During a recession, the actual rate of unemployment will be

Question

Quizplus · Accepted Answer

During a recession, firms have to reduce production due to declining demand from consumers, leading to layoffs and reductions in hiring new workers. As a result, the actual rate of unemployment will rise above the natural rate of unemployment, which is the minimum unemployment rate that exists due to the characteristics of the labor market, such as information asymmetry and job search friction. Therefore, choice B is the correct answer.

During a Recession, the Actual Rate of Unemployment Will Be