During a recession, people drop out of the labor force because they are unable to find a job. All else the same, this
A) increases the official U-3 unemployment rate.
B) increases the official U-3 unemployment rate and the labor force participation rate.
C) does not change the official U-3 unemployment rate.
D) decreases the official U-3 unemployment rate.

Question

Quizplus · Accepted Answer

When people drop out of the labor force, they are no longer counted as unemployed, which decreases the U-3 unemployment rate.

During a Recession, People Drop Out of the Labor Force