Question

Explain how unemployment is measured.

In late 2010 economists were debating wether the U.S. economy was in a recession. GDP seemed to be rising, yet the unemployment rate was stuck at close to percent. In thinking about the economic distress experienced during a recession, which is the most important: high unemployment or falling GDP? Defend your answer

Answer 1

Recession is defined as an economic situation when the economic indicators like real GDP, Income & employment & manufacturing , retail sales, fall significantly in last 1-2 years .

Unemployment leads to reduction in consumer demand. That further lead to downfall in production & thus increasing layoffs.

Thus unemployment is a result of recession or the negative GDP growth, & there could be other possible reasons too.

But at the core of the economic distress during recession is the concern for falling GDP & falling consumer demand & collapsing of business investment environment. So falling GDP is more important concern than rising unemployment