An increase in the number of discouraged workers in the economy tends to:
A)raise the official unemployment rate.
B)lower the official unemployment rate.
C)lower the number of people who are frictionally unemployed.
D)increase the number of people who are structurally unemployed.

Question

Quizplus · Accepted Answer

Discouraged workers are those who have given up on finding a job and have stopped actively looking for work. When the number of discouraged workers increases, they are no longer counted as part of the labor force and, as a result, the official unemployment rate may decrease. This is because the unemployment rate only takes into account those who are actively seeking employment. However, it is important to note that an increase in discouraged workers also reflects a decrease in the overall health of the labor market.

An Increase in the Number of Discouraged Workers in the Economy