Question

Unemployment tends to rise when ______.

Options

• aggregate output rises

• aggregate output falls

• employment rises

• None of these

Answer 1

Unemployment tends to rise when aggregate output falls.

Explanation:

A decline in overall production reduces the demand for labour, leading to job losses. When businesses produce less, they require fewer workers, increasing unemployment. When aggregate output decreases, unemployment rises due to diminished employment opportunities in the economy.