Suppose that some people report themselves as unemployed when,in fact,they are working in the underground economy.If these persons were counted as employed,
A)both the unemployment rate and labor-force participation rate would be higher.
B)both the unemployment rate and labor-force participation rate would be lower.
C)the unemployment rate would be higher and the labor-force participation rate would be higher.
D)the unemployment rate would be lower and the labor-force participation rate would be unaffected.

Question

Quizplus · Accepted Answer

If people working in the underground economy were counted as employed, the unemployment rate would decrease because there would be fewer people classified as unemployed. The labor-force participation rate would remain unaffected because these individuals are already part of the labor force.

Suppose That Some People Report Themselves as Unemployed When,in Fact,they