Terrance loses his job and immediately begins looking for another. Other things the same, the unemployment rate

Question

Quizplus · Accepted Answer

Terrance losing his job and immediately looking for another does not affect the labor-force participation rate, as he is still considered part of the labor force. However, since he is unemployed, the unemployment rate increases. Option A is incorrect because Terrance actively looking for a job means he is still part of the labor force, so the labor-force participation rate does not decrease. Option C is also incorrect because Terrance losing his job does not lead to an increase in the labor-force participation rate. Option D is incorrect because Terrance losing his job and actively looking for another job would mean he is still part of the labor force, so the labor-force participation rate is unaffected.

Terrance Loses His Job and Immediately Begins Looking for Another