If an unemployed person quits looking for work, other things equal, which statement best describes the changes in the labour statistics?
A) The unemployment rate decreases, and the labour-force participation rate increases.
B) The unemployment rate decreases, and the labour-force participation rate decreases.
C) The unemployment rate stays the same, and the labour-force participation rate decreases.
D) The unemployment rate and the labour-force participation rate stay the same.

Question

Quizplus · Accepted Answer

If an unemployed person quits looking for work, they are no longer considered part of the labor force. This means that both the numerator and denominator of the unemployment rate decrease, leading to a lower unemployment rate. However, since the individual is no longer part of the labor force, the labor-force participation rate also decreases. Therefore, option B is the correct choice.

If an Unemployed Person Quits Looking for Work, Other Things