Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then

a. both the unemployment rate and labor-force participation rate would be higher.

b. the unemployment rate would be higher, and the labor-force participation rate would be lower.

c. the unemployment rate would be lower, and the labor-force participation rate would be higher.

d. both the unemployment rate and labor-force participation rate would be lower.

Question

Business

Marlie Valdez

14 July, 19:07

Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then

a. both the unemployment rate and labor-force participation rate would be higher.

b. the unemployment rate would be higher, and the labor-force participation rate would be lower.

c. the unemployment rate would be lower, and the labor-force participation rate would be higher.

d. both the unemployment rate and labor-force participation rate would be lower.

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Answers (1)

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Kathy Mendez · Answer 1

The correct answer is A: both the unemployment rate and labor-force participation rate would be higher.

Explanation:

The unemployment rate is the share of the labor force that is jobless, expressed as a percentage. To calculate the unemployment rate, the number of unemployed people is divided by the number of people in the labor force, which consists of all employed and unemployed people. It defines unemployed people as those who are willing and available to work, and who have actively sought work.

By increasing the number of people unemployed, the number of employed people is now divided by a larger base. Meaning that the unemployment rate increases.

The labor force participation rate measures an economy's active labor force and is the sum of all employed workers divided by the working-age population. It refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work would not be included in the participation rate.

By increasing the number of people of unemployed people, they will be considered as people that are actively looking for work. Meaning that labor force participation increases.