The number of unemployed can drop simultaneously with increases in the unemployment rate.
This is because the labor force is shrinking,thereby causing people formerly classified as unemployed to be no longer in the labor force.

Question

Quizplus · Accepted Answer

The statement is true because the unemployment rate is calculated as the percentage of the labor force that is unemployed. If the labor force shrinks, then the number of unemployed individuals can drop, but the unemployment rate may increase if the decrease in the labor force is larger than the decrease in the number of unemployed individuals.

The Number of Unemployed Can Drop Simultaneously with Increases in the Unemployment