If a chart shows a 12% year-over-year increase in unemployment, what does that indicate?

• A. The unemployment rate rose by 12 percentage points from last year.
• B. The unemployment rate rose by 12 percent relative to the previous year.
• C. The unemployment rate stayed the same.
• D. The unemployment rate decreased.

Answer: (B)

Year-over-year change compares this period to the same period a year earlier. A 12% increase means the current unemployment rate is 12% higher than last year's rate, i.e., it’s 1.12 times the prior level. For example, if last year’s rate was 6%, this year would be about 6.72%. This is a relative change, not an absolute point change. If it were 12 percentage points, that would add 12 points to the rate (a different idea). So the correct interpretation is that the unemployment rate rose by 12 percent relative to the previous year.