Discussion
It is often true that as the economy begins to recover from a recession, the unemployment rate rises because
Answer: B
The key accepts the second option, that workers who were discouraged about finding a job begin to look for work again. A person who has stopped looking is not counted in the labour force, and when the recovery starts such people re-enter the labour force and are counted as unemployed until they find jobs, so the unemployment rate can rise at the start of a recovery. The first option is wrong because the demand for goods rises in a recovery, and the third blames the errors of data collection, which is not an economic explanation. The fourth option, that firms are slow to hire, is also a feature of recoveries, but the key does not accept it.
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