The presence of discouraged workers
A) increases the size of the labor force but does not affect the unemployment rate.
B) reduces the size of the labor force but does not affect the unemployment rate.
C) may cause the oﬃcial unemployment rate to understate the true amount of unemployment.
D) may cause the oﬃcial unemployment rate to overstate the true amount of unemployment.

Question

Quizplus · Accepted Answer

Discouraged workers are individuals who have given up on finding a job and are no longer actively seeking employment. Since they are not actively seeking employment, they are not included in the labor force and are not counted as unemployed. This may cause the official unemployment rate to understate the true amount of unemployment because discouraged workers are not included.

The Presence of Discouraged Workers