If the numbers of people officially employed and officially unemployed each increased by 5%, with no change in the non-institutional civilian population, what would be the effect?
A)an increase in the unemployment rate and no change in the labor force participation rate
B)a decrease in the unemployment rate and no an increase in the labor force participation rate.
C)no change in the unemployment rate and an increase 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 people officially employed and officially unemployed each increased by 5%, with no change in the non-institutional civilian population, what would be the effect?
A)​an increase in the unemployment rate and no change in the labor force participation rate
B)​a decrease in the unemployment rate and no an increase in the labor force participation rate.
C)​no change in the unemployment rate and an increase 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 individuals divided by the labor force (the sum of employed and unemployed individuals). If both the number of employed and unemployed individuals increase by the same percentage, their ratio remains the same, meaning the unemployment rate does not change. However, since both employed and unemployed numbers increase while the non-institutional civilian population remains constant, more people are participating in the labor force, thus increasing the labor force participation rate.

If the Numbers of People Officially Employed and Officially Unemployed