Question

why does the unemploymenr rate remain about zero percent during economic expansions? is this a good or bad thing for the economy? explain

Answer 1

Answer:

See below

Explanation:

When unemployment is about zero percent, everyone actively searching for a job will be employed. Expansion in the economy means growth in all industries, including manufacturing and services. As the industries grow, they will hire workers to help support growth. Continued growth will lead to the employment of more people, resulting in zero unemployment. Theoretically, it is possible to have zero percent unemployment.

Zero unemployment is bad a thing for the economy because of the following reasons.

1. At zero employment, wages are likely to rise to a level that would hurt profitability in the economy. Companies will be competing to hire the few available workers. Reduced supply versus high demand will push wages high.
2. Employment turnover will be very low. Companies will be unable to fire inefficient workers. Finding competent ones to replace them will be difficult. Less competition in the employment sector will make workers less productive.