The presence of discouraged workers:
A)increases the size of the labour force, but does not affect the unemployment rate
B)reduces the size of the labour force, but does not affect the unemployment rate
C)may cause the official unemployment rate to understate the level of unemployment
D)may cause the official unemployment rate to overstate the level of unemployment
E)increases both the size of the labour force and the unemployment rate

Question

Quizplus · Accepted Answer

Discouraged workers are not counted in the labor force because they have stopped looking for work, which can lead to an understatement of the unemployment rate since these individuals are not reflected in the official statistics.

The Presence of Discouraged Workers