Which scenario would indicate a healthy labor market alongside strong economic output?

Which scenario would indicate a healthy labor market alongside strong economic output?

• A. High GDP growth with a rising unemployment rate
• B. Low GDP growth with low unemployment
• C. Strong GDP growth and low unemployment
• D. Declining GDP with high inflation

Answer: (C)

A healthy labor market alongside strong economic output shows up when the economy is expanding and many people are working. When GDP is growing, businesses are producing more, often leading to more hiring. If unemployment is also low, it means that the people who want jobs are finding them, so more households have income to spend and support continued growth. This combination—robust output and low unemployment—indicates that the gains from growth are translating into real opportunities in the job market.

The scenario described fits this best: the economy is producing more, and unemployment is low, which together signal a healthy balance between demand, production, and work opportunities. In contrast, high growth with rising unemployment suggests that growth isn’t creating jobs; low growth with low unemployment implies the economy isn’t expanding much even though jobs are available; and declining output with high inflation points to stagnation and rising prices, not a healthy expansion.