1. After the conclusion of the 1991 recession, the unemployment rate generally (

Question

1. After the conclusion of the 1991 recession, the unemployment rate generally (increased/decreased)

throughout the 1990s.

2. An increase in

can help explain this change in unemployment and the positive growth in the 1990s.
(short run aggregate supply, long run aregate supply, both)

In 2000, the unemployment rate dropped under 496, which is below what economists belleve to be the natural rate. After the Great Recesslon, the unemployment rate remalned stubbornly high. 12% 10% The Great Recession lasted from December 2007 to June 2009 8% 6% 4% 2% 0% -2% The expansion from April 1991 to March 2001 lasted a full ten years, the longest expansion in U.S. history -4% Raal GDP plunged 8.2% in the fourth quarter of 2008 -6% -8% -10% 2000 2010

Explanation / Answer

1.

Decreased

It is suggested by the declining trend line of unemployment rate over the period since 1991,

2.

Short run aggregate supply

Due to expansionary policies, the SRAS shifted to the right to increase the output level, that were demanded by the AD. While doing so, new jobs got created and unemployment rate came down on a consistent basis that fell below the natural rate of unemployment.

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