Unemployment Peaks Align with Recessions

Steps:

• Identify recession periods on the diagram as shaded or marked intervals between 1978 and 2012.
• Track the unemployment rate line to see its changes over time.
• Compare rate trends during recessions versus expansions.
• Evaluate each choice against observed patterns in the data.

Why D is correct:

• Economic theory defines recessions as periods of contraction where unemployment rises and often peaks due to business slowdowns and layoffs (Okun's Law links GDP drops to unemployment increases).

Why the others are wrong:

• A: Diagram shows some recessions shorter than two years, like brief dips in the 1980s.
• B: Intervals vary irregularly, with gaps of 3–10 years between recessions.
• C: While rates rose, they did not always peak within recessions; some peaks occurred post-recession.

Final answer: D