When an individual who has not been working but has been looking for work decides to terminate the search process, the official unemployment rate
A) will fall.
B) will remain unchanged.
C) will rise.
D) may fall or rise depending on whether or not the individual resumes his education.

Question

Quizplus · Accepted Answer

When an individual who has not been working but has been looking for work decides to terminate the search process, they are no longer considered actively seeking employment and are no longer counted in the labor force. As a result, the numerator (number of unemployed individuals) of the unemployment rate formula decreases, while the denominator (labor force) remains the same. This causes the official unemployment rate to fall.

When an Individual Who Has Not Been Working but Has