The existence of discouraged workers tends to cause the official unemployment rate to understate the actual rate.

Question

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Discouraged workers are individuals who are not seeking employment because they believe no jobs are available for them or they are discouraged by prevailing economic conditions. Since they are not actively seeking work, they are not counted in the official unemployment rate. Therefore, the actual rate of unemployment may be higher than the official rate indicated by the government.

The Existence of Discouraged Workers Tends to Cause the Official