The existence of discouraged workers:
A)increases the size of the labor force, but does not affect the unemployment rate.
B)reduces the size of the labor force, but does not affect the unemployment rate.
C)may cause the official unemployment rate to understate the true amount of unemployment.
D)may cause the official unemployment rate to overstate the true amount of unemployment.

Question

Quizplus · Accepted Answer

Discouraged workers are those who have given up actively seeking employment due to a lack of available job opportunities. They are not included in the official unemployment rate, which only considers those who are actively seeking employment. Therefore, the existence of discouraged workers may cause the official unemployment rate to understate the true amount of unemployment.

The Existence of Discouraged Workers