Suppose there are 4 million people in an economy that are classified as unemployed.After a more thorough investigation,it becomes obvious that 200,000 of these people are actually phantom unemployed.As a result of this discovery,the unemployment rate will
A)Decrease.
B)Increase.
C)Remain unchanged until the unemployed find a job.
D)Increase initially but decrease when the phantom unemployed receive unemployment benefits.

Question

Quizplus · Accepted Answer

The unemployment rate is calculated as the number of unemployed individuals divided by the labor force (which includes both employed and unemployed individuals). If the number of unemployed individuals is reduced by 200,000 (the number of phantom unemployed), but the size of the labor force remains the same, then the unemployment rate will decrease. This is because the numerator (number of unemployed individuals) has decreased, while the denominator (labor force) remains the same.

Suppose There Are 4 Million People in an Economy That