Unemployment is often called a lagging or trailing indicator because unemployment tends to rise some time after the economy begins to slow down, and unemployment begins to fall again after the economy begins to rebound. Unemployment trails GDP because: A) laws prevent firms from reducing employment during recessions and during expansions people are still collecting unemployment insurance.
B) firms reduce hours before laying off when the economy is in recession, and increase hours before hiring when the economy expands.
C) when the economy is in a recession, firms do not want to pay unemployment insurance, and during expansions they do not want the added cost of new employees.
D) the labor force increases during recessions and shrinks during expansions.