The unemployment rate does not tend to fall as soon as the economy pulls out of a recession. Which of the following best explains this?
A. During recessionary periods, firms switch to more capital-intensive production techniques, so they do not need to increase employment as the economy pulls out of the recession.
B. Firms are holding excess labor, so as the economy pulls out of the recession, firms do not need to hire new workers immediately.
C. Firms' optimism about the state of the economy increased prior to the economy pulling out of the recession, so firms increased their employment earlier.
D. Firms are not able to find qualified workers to fill the job vacancies.
Answer: B
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