Why would the unemployment rate lower during the recession than after the recession? (problem gives data...

Why would the unemployment rate lower during the recession than after the recession? (problem gives data that shows rate was 5% in dec 2007, rose to 8% in jun 2009)

Why was the unemployment rate steady or even falling during the recession?

What are the limitations to calculating and reporting unemployment using the U3 method?

Thank you in advance!

Solutions

Expert Solution

When the country is facing recession it means it is still in a stage where the effects of recession are developing which means business are seeing a fall in their sales and revenue, country GDP is falling down every quarter , Business is in the verge stoping expansion, stock market is falling below the expectations. All this are the phases where still recession is taking place. So during recession everyone are still in a hope they will again come back to normal position and only after a certain point everyone will understand the economic situation and start taking necessary steps to avoid huge losses. Hence during recession the unemployment rate will lower than after recession.

Unemployment will be steady during recession and increase after recession.

U3 method will not calculate the strength of labour market it will just people who are unemployed by who are in the labour force. It will not count people who are unemployed by any reasons and also people who are studying which shows the exact strength of labour market.

Rahul Sunny answered 1 year ago

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