Question

What does the phrase 'jobless recovery' refer to?

a) It refers to a situation where an economy is moving out of a recession without a significant increase in employment.

b) It refers to a situation in which rising productivity has made it possible for firms to reduce their workforce and increase output at the same time.

c) It refers to the phenomenon where U.S. firms move their production abroad, thereby destroying jobs in the domestic market and creating new jobs in foreign markets.

d) It refers to a situation in which a worker's real wage falls despite increases in productivity.

Answer 1

A 'jobless recovery' refers to an economic situation where the economy recovers from a recession with output rising, but with no substantial increase in employment, often due to increased business efficiency or changes such as technological advancements.

Step-by-step explanation:

The phrase 'jobless recovery' refers to a situation where an economy is moving out of a recession without a significant increase in employment. This phenomenon can occur for various reasons, such as businesses becoming more efficient and needing fewer workers, or due to the lasting impacts of restructuring and technology advancements that render some jobs obsolete. In the context of the Great Recession, although the economy may have begun to improve, high unemployment rates persisted because unemployment is a lagging indicator of business activity.

During a recession, firms lay off workers to cut costs, but when the economy starts to rebound, they may be cautious in hiring new employees due to the expenses associated with recruitment and training. Therefore, even when an economy begins to grow again, the employment levels may not immediately rise, leading to a 'jobless recovery' where output increases but without a corresponding increase in job creation.