"economics"exercise:Unemployment rate
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Questions 1:
Holding the working-age population constant, if the labor force participation rate declines while the number of people employed remains unchanged, the unemployment rate will most likely:
A、 remain unchanged.
B、 increase.
C、 decrease.
Questions 2:
The unemployment rate is best described as the ratio of unemployed to:
A 、labor force.
B、 labor force minus frictionally unemployed.
C、 total population of people who are of working age.
C is correct. For a given working-age population, a decline in the labor force participation rate (often caused by an increase in discouraged workers) reduces the labor force. If the number of people employed remains the same while the labor force becomes smaller, the number of workers defined to be unemployed must be smaller and thus the unemployment rate lower. The following example illustrates the direction of change:
A is incorrect, as per table above.
B is incorrect, as per table above.
A is correct. The unemployment rate is the ratio of unemployed to labor force.
B is incorrect because unemployment rate includes all the labor force.
C is incorrect because unemployment rate is based on the labor force and the working age. The labor force is defined as the number of people who either have a job or are actively looking for a job.
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