The labor force is 100 million and the unemployment rate is 5 percent.One million people quit looking for a job.What is it called when an individual leaves the labor force,and in this case what is the new unemployment rate?
A)Encouraged worker, 5 percent.
B)Discouraged worker, 5.05 percent.
C)Discouraged worker, 3 percent.
D)Discouraged worker, 4.04 percent.

Question

Quizplus · Accepted Answer

When individuals stop looking for work, they are considered discouraged workers and are no longer part of the labor force. The new labor force is 99 million, with 5 million unemployed, resulting in an unemployment rate of 5/99 = 5.05%.

The Labor Force Is 100 Million and the Unemployment Rate