Why does unemployment tend to change when the level of output changes?
A)Persons wish to buy things, and if output falls, people need to work less to earn the income to buy the smaller output.
B)Labor is an input, and if output falls, employers need fewer workers to make it, so the employment falls.
C)When output rises, persons are more interested in buying, and will work more to earn the income to buy things.
D)Persons face the option of buying or working, so that when they do more of one, the other necessarily falls.
E)When companies replace workers with machines, output rises, and people take time off from work to buy before returning to employment.

Question

Quizplus · Accepted Answer

Unemployment tends to change when the level of output changes because labor is an input in the production process. If output falls, employers need fewer workers to produce the smaller output, leading to a decrease in employment or an increase in unemployment. Conversely, if output rises, more workers may need to be hired to meet the demand for the increased output, leading to a decrease in unemployment.

Why Does Unemployment Tend to Change When the Level of Output