Which of the following factors might cause the unemployment rate to underestimate the true extent of unemployment?
A)Many people have a part-time as well as a full-time job.
B)Employees increase the number of hours they work overtime.
C)There are a large number of people working in the underground economy.
D)Many people become discouraged and cease looking for work.

Question

Quizplus · Accepted Answer

When people become discouraged and stop looking for work, they are no longer counted as unemployed in the official unemployment rate. This means that the unemployment rate can underestimate the true extent of unemployment if a significant number of people are not included in the calculation.

Which of the Following Factors Might Cause the Unemployment Rate