If the numbers of employed and unemployed do not change but the size of the civilian population increases by 10%, what would be the effect?
A)an increase in the unemployment rate and an increase in the labor force participation rate
B)an increase in the unemployment rate and no change in the labor force participation rate
C)an increase in the unemployment rate and a decrease in the labor force participation rate
D)no change in the unemployment rate and a decrease in the labor force participation rate

Question

If the numbers of employed and unemployed do not change but the size of the civilian population increases by 10%, what would be the effect?
A)​an increase in the unemployment rate and an increase in the labor force participation rate
B)​an increase in the unemployment rate and no change in the labor force participation rate
C)​an increase in the unemployment rate and a decrease in the labor force participation rate
D)​no change in the unemployment rate and a decrease in the labor force participation rate

Quizplus · Accepted Answer

The unemployment rate is calculated as the number of unemployed divided by the labor force (employed + unemployed), which does not change if the numbers of employed and unemployed remain constant. The labor force participation rate is calculated as the labor force divided by the civilian population. If the civilian population increases while the labor force remains constant, the labor force participation rate decreases.

If the Numbers of Employed and Unemployed Do Not Change