If my spouse was unemployed as of Dec 31 of a tax year, should her occupation be "Unemployed"?

The IRS only uses "occupation" for statistical purposes.  Occupation has no effect at all on your tax due or refund.  If she wants to list the job title she had prior to becoming unemployed, that is fine.  If she wants to say "Unemployed" --also fine.  If she wants to say "Domestic Goddess"--also fine.

Perfect, thank you!