📚 Learning Guide
Economic Recovery and Supply Shifts
easy

What happens to the labor market when an economy undergoes a recovery after a recession?

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Learning Path

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Choose the Best Answer

A

Unemployment rates decrease as businesses begin hiring again

B

Wages across the board decrease immediately

C

There is an increase in layoffs despite economic growth

D

Job opportunities remain stagnant

Understanding the Answer

Let's break down why this is correct

Answer

When an economy recovers from a recession, the labor market starts to improve, meaning more jobs become available. During a recession, many businesses may cut back on hiring or even lay off workers, leading to higher unemployment. However, as the economy grows again, companies begin to see increased demand for their products and services, prompting them to hire more employees. For example, if a restaurant that closed during the recession reopens and starts serving more customers, it will need to hire more staff to meet the demand. This increase in job opportunities helps reduce unemployment and can lead to higher wages as businesses compete for workers.

Detailed Explanation

During a recovery, businesses start to grow again. Other options are incorrect because Some might think that wages drop when the economy improves; It may seem like companies would lay off workers even when things are better.

Key Concepts

Labor Market Adjustments.
Topic

Economic Recovery and Supply Shifts

Difficulty

easy level question

Cognitive Level

understand

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