If a large number of individuals file unemployment claims and work in the underground economy:
A)the unemployment rate overstates the level of unemployment.
B)the unemployment rate understates the level of unemployment.
C)the unemployment rate is not affected.
D)discouraged worker statistics will underestimate the true state of frustration by job seekers.

Question

Quizplus · Accepted Answer

When individuals work in the underground economy, they are not counted as employed in official statistics, leading to an overstatement of the unemployment rate.

If a Large Number of Individuals File Unemployment Claims and Work