In March 2007March 2007 , the U. S. unemployment rate was 4.44.4 percent. In August 2008 August 2008 , the unemployment rate was 6.16.1 percent. Predict what happened to unemployment between March 2007March 2007 and August 2008 August 2008 , if the labor force was constan

Question

Ciara Rogers

Business

5 September, 07:09

In March 2007March 2007 , the U. S. unemployment rate was 4.44.4 percent. In August 2008 August 2008 , the unemployment rate was 6.16.1 percent. Predict what happened to unemployment between March 2007March 2007 and August 2008 August 2008 , if the labor force was constan

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Answers (1)

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Sarah · Answer 1

A Recession happened.

Explanation:

When the market sees a recession we see an increase in the unemployment rate due to cyclical unemployment whenever there in a business cycle even though the labor force was constant but in a recession companies face a lot of costs which become higher than their revenue so for example when there is a recession the cost of producing 1 more unit is actually higher than the revenue a firm gets from producing that 1 unit because marginal cost increases at a decreasing rate so they have to lay off people at a firm on that unit of production to maximize revenues.