Question

Which of the following is correct?

Answer 1

Answer:

A) The amount of unemployment that a country typically experiences is a determinant of that country's standard of living, and some degree of unemployment is inevitable in a complex economy.

Explanation:

Higher unemployment inevitably leads to a decrease in the standard of living. We don't have to go back to the great depression to realize that high unemployment increases poverty, we only need to look back 12 years ago during the Great Recession. As the economy collapsed, the housing bubble bursted, and the financial sector was in shock, unemployment rate increased dramatically. Most people need to work in order to have a decent living, unless they are extremely rich and can afford not doing so.

Currently the US economy's unemployment is around 4%, which is considered a full employment level, since there will always be some frictional unemployment even when the economy is growing steadily.