The change in the unemployment rate is approximately equal to
A)the negative of the growth rate of output.
B)the negative policy rate.
C)the negative inflation rate.
D)the negative of the growth rate of money supply.

Question

Quizplus · Accepted Answer

There exists an inverse relationship between unemployment rate and the growth rate of output. When output grows, firms tend to employ more people which reduces the unemployment rate, and when output falls, firms tend to contract which causes a raise in the unemployment rate. Hence, the change in the unemployment rate is approximately equal to the negative of the growth rate of output.

The Change in the Unemployment Rate Is Approximately Equal to