When 100 people who had previously stopped looking for jobs now decide to look for jobs, the
A) unemployment rate decreases.
B) size of the labor force increases.
C) labor-force participation rate does not change.
D) unemployment rate does not change.

Question

Quizplus · Accepted Answer

The labor force is composed of all individuals who are employed or unemployed and actively seeking employment. When 100 people who had previously stopped looking for jobs now decide to look for jobs, they are added to the labor force, thus increasing its size. Therefore, option B is the correct answer. Option A is incorrect because the unemployment rate may or may not decrease, depending on how many of the newly added job seekers are able to find jobs. Option C is incorrect because the labor-force participation rate is the percentage of the working-age population that is in the labor force, and it would increase if 100 people joined the labor force. Option D is incorrect for the same reason that option A is incorrect.

When 100 People Who Had Previously Stopped Looking for Jobs