Why does unemployment rise when the economy slows?
A. Decreased demand for goods causes demand for labor to go down.****
B. Decreased demand for goods causes the cost of labor to go up.
C. Increased demand for goods causes demand for labor to go down.
D. The slower economy makes companies less likely to outsource jobs.
I agree.
AWESOMESAUCE. Thanks Ms. Sue, you're the best! :)
:-) You're welcome, Nirvana.
The correct answer is A. Decreased demand for goods causes demand for labor to go down.
Unemployment tends to rise when the economy slows down because of decreased demand for goods and services. When the economy is in a slump, people tend to spend less on goods and services, which leads to a decline in demand. As a result, businesses may not need as many workers to produce goods and provide services. This decrease in demand for goods causes a decrease in demand for labor, leading to higher unemployment rates.
To understand this relationship, it's important to grasp the concept of supply and demand in the labor market. When the economy is strong and businesses are doing well, they typically have higher demand for labor to meet the demand for their products or services. On the other hand, when the economy slows down and people are not spending as much, businesses scale back their operations, which means they require fewer workers.
Therefore, when measuring unemployment rates, it is essential to consider the state of the economy and the demand for goods and services. When the economy is thriving, unemployment rates tend to be lower because businesses require more workers. Conversely, during an economic slowdown or recession, unemployment rates are likely to rise due to reduced demand for labor.