Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result,
A) the oﬃcial unemployment rate will fall.
B) the oﬃcial unemployment rate will rise.
C) the oﬃcial unemployment rate will remain unchanged.
D) the size of the labor force will increase.

Question

Quizplus · Accepted Answer

The official unemployment rate is calculated as the number of unemployed people divided by the number of people in the labor force. Since the five million part-time workers who switched to full-time work were previously counted as employed (albeit part-time), their switch to full-time work will not have an immediate effect on the unemployment rate. The size of the labor force may increase if there were additional people who were not previously counted but decide to enter the labor force as a result of the increased full-time employment opportunities. However, this change is not guaranteed and depends on other factors.

Suppose There Are 10 Million Part-Time Workers and 90 Million