Question

Under what condition would an increase in the unemployment rate be a positive sign?

Short answer

Unemployment rate depicts percentage of individuals unemployed in total labor force.

Step-by-step solution

Step 1. Introduction

Unemployment rates do fluctuate over time. There are different reasons causing unemployment in economy. A condition is said to be positive under two conditions:

Step 2. Introduction of new jobs

When a firm or government is doing good and demand of the product is increased. They need to increase their supply so when government or a firm introduces new jobs, opportunities or industries indicate that economy is doing good and shows a positive sign .

Step 3. Reentering of discouraged workers

When discouraged workers become hopeful and tart looking for jobs again which will eventually result in decrease of unemployment rate and this unemployment rate is good for economy. This is a positive sign as it is showing reentering of workers in labor, which indicates that more job opportunities are introduced.