With the economy essentially going into lockdown as a result of COVID-19, the unemployment rate in the United States has begun to skyrocket, reaching 14.7% in April. Just prior to this, however, in February 2020, the U.S. unemployment rate was at 3.5 percent. The last time the U.S. unemployment rate was lower than this was 51 years ago, in May 1969 (when it was 3.4%).

Unemployment rates this low are often viewed as being very good for the economy, so explain how low unemployment rates benefit the economy in terms of the following:

• productivity and GDP growth
• wages and wage growth
• consumer confidence
• labor supply & demand
• entitlement spending (make sure you understand the term "entitlement spending")

Unemployment rates this low can also be viewed as being detrimental to the economy, so explain how low unemployment rates may also damage the economy in terms of the following:

• productivity and GDP growth
• employee loyalty
• potential inflation
• labor supply & demand