What do GDP and unemployment rate indicate about an economy?

• A. GDP measures labor productivity only.
• B. Unemployment rate indicates consumer spending.
• C. GDP shows overall economic output; unemployment rate reflects labor market conditions.
• D. GDP and unemployment rate are unrelated economic indicators.

Answer: (C)

GDP and unemployment rate are two key measures of economic health. GDP shows the total value of all final goods and services produced in the country over a period, so it indicates the size of the economy and whether it’s growing or shrinking. The unemployment rate tells you what share of the labor force is without work but actively seeking it, which reveals how strong or weak the job market is. When the economy grows and output increases, more jobs are created and unemployment tends to fall. When GDP declines, production slows and unemployment often rises. These indicators together give a snapshot of overall economic performance. GDP isn’t just about productivity per worker, and the unemployment rate isn’t a direct measure of consumer spending, though they relate—healthy economies usually show rising GDP and lower unemployment.