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

Question

Quizplus · Accepted Answer

The unemployment rate is directly influenced by the level of aggregate economic activity. When economic activity is low, businesses are less likely to hire and may even lay off workers, leading to an increase in the unemployment rate. Conversely, when economic activity is high, businesses are more likely to hire and the unemployment rate tends to decrease.

A Key Determinant of the Unemployment Rate Is