The presence of discouraged workers causes the measured unemployment rate to be:

Question

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Discouraged workers are those who have given up actively seeking employment due to lack of job opportunities, and therefore are not included in the labor force. Since the unemployment rate is calculated as the ratio of the number of unemployed individuals to the total labor force, the presence of discouraged workers means that the labor force is smaller than it would be if these workers were actively seeking employment. As a result, the measured unemployment rate is lower than it would be if discouraged workers were included in the calculation, leading to an understatement of the true unemployment rate.

The Presence of Discouraged Workers Causes the Measured Unemployment Rate