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Chapter 21: Q. 39 (page 525)

Under what condition would an increase in the unemployment rate be a positive sign?

Short Answer

Expert verified

An increase in the unemployment rate will be a positive sign when the discouraged workers start looking for work again.

Step by step solution

01

Step 1. Unemployment Rate.

The unemployment rate is the percentage of adults who are able to work and are willing to work, and actively looking for work but are not able to find a job.

02

Step 2. Increase in Unemployment Rate.

An increase in the unemployment rate will be a positive sign when the discouraged workers start looking for work again. Re-entering of discouraged workers is a positive sign as it shows that more jobs are available for workers.

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Most popular questions from this chapter

Is a decrease in the unemployment rate necessarily a good thing for a nation? Explain.

What is structural unemployment? Give examples of structural unemployment.

While unemployment is highly negatively correlated with the level of economic activity, in the real world it responds with a lag. In other words, firms do not immediately lay off workers in response to a sales decline. They wait a while before responding. Similarly, firms do not immediately hire workers when sales pick up. What do you think accounts for the lag in response time?

Using the above data, what is the unemployment rate? These data are U.S. statistics from 2010. How does it compare to the February 2015 unemployment rate computed earlier?

Why do you think that unemployment rates are lower for individuals with more education?
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