Suppose that during a given month 500,000 persons quit their job to become self-employed. This will cause
A) the unemployment rate to fall.
B) the unemployment rate to rise.
C) payroll employment to rise.
D) payroll employment to fall.
E) no change in either the unemployment rate or payroll employment.

Question

Quizplus · Accepted Answer

When individuals quit their jobs to become self-employed, they are no longer counted as part of payroll employment because they are not employees of another entity; they are now self-employed. This reduces the number of people on company payrolls, leading to a fall in payroll employment.

Suppose That During a Given Month 500,000 Persons Quit Their