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In: Economics

Is an increase in the unemployment rate necessarily a bad thing? Is a decrease in the...

Is an increase in the unemployment rate necessarily a bad thing? Is a decrease in the unemployment rate necessarily a good thing?

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Expert Solution

The national unemployment rate is defined as the percentage of the total work force unemployed. It's generally recognized as a key indicator of a country's labor market performance. The unemployment rate attracts a lot of media attention as a closely watched economic indicator, particularly during recessions and difficult economic times. That is because the unemployment rate is not just impacting those unemployed people – the extent and severity of unemployment causes has wide-ranging impacts in the broader economy.

Increasing unemployment rate is not necessarily a bad thing for a nation in every case For example, as the economy is improving, people who were discouraged may start looking for work again.As this happens, the measured unemployment rate will increase temporarily as they will again be counted as unemployed.

Decrease in the unemployment rate necessarily a good thing for a nation in every case If unemployed workers become discouraged, the measured unemployment rate will decrease

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