Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?
A)It would increase.
B)It would fall.
C)It would change, but the effect cannot be predicted.
D)It would not change.

Question

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?
A)​It would increase.
B)​It would fall.
C)​It would change, but the effect cannot be predicted.
D)​It would not change.

Quizplus · Accepted Answer

The unemployment rate would fall because those who have given up on finding a job are no longer considered part of the labor force, and therefore are not counted as unemployed. This would decrease the number of unemployed individuals and decrease the unemployment rate.

Suppose That Everyone Who Has Looked for a Job for More