If people who have been looking for work give up actively looking for work, ceteris paribus, the: unemployment rate decreases. working-age population increases. unemployment rate increases. working-age population decreases. labour force participation rate increases.
Question
If people who have been looking for work give up actively looking for work, ceteris paribus, the:
unemployment rate decreases.
working-age population increases.
unemployment rate increases.
working-age population decreases.
labour force participation rate increases.
Solution
If people who have been looking for work give up actively looking for work, ceteris paribus, the:
unemployment rate decreases.
This is because the unemployment rate is calculated as the number of unemployed people actively looking for work divided by the total labor force. If people stop actively looking for work, they are no longer considered part of the labor force, which decreases the unemployment rate.
The working-age population does not change because this is determined by age, not employment status.
The labor force participation rate decreases.
This is because the labor force participation rate is the percentage of the working-age population that is either employed or actively looking for work. If people stop actively looking for work, they are no longer considered part of the labor force, which decreases the labor force participation rate.
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