Satchel loses his job and immediately begins looking for another. Other things the same, the unemployment rate

A) increases, and the labor-force participation rate decreases.

B) and the labor-force participation rate both increase.

C) increases, and the labor-force participation rate is unaffected.

D) is unaffected, and the labor-force participation rate decreases.

Question

Raquel Arnold

Business

25 December, 10:58

Satchel loses his job and immediately begins looking for another. Other things the same, the unemployment rate

A) increases, and the labor-force participation rate decreases.

B) and the labor-force participation rate both increase.

C) increases, and the labor-force participation rate is unaffected.

D) is unaffected, and the labor-force participation rate decreases.

+3

Answers (1)

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Talia Ayala · Answer 1

C. increases and the labour force participation rate is unaffected.

Explanation:

Unemployment refers to the number of people who are willing, able and are actively seeking work but haven't found any. The labour force participation rate consists of the total number of people in an economy who are employed or are seeking for work. Although Satchel lost his job, he did not retire nor did he get demotivated and give up on working in the future, instead he is still looking for a job which suggests that he is currently unemployed. This increases the unemployment rate until he is able to find another job. At the same time, the labour force participation rate consists of both the employed and the unemployed. Previously, Satchel was part of the employed in the labour force and is now still in the labour force but as unemployed. Although his title has changed, the labour force participation rate remains unchanged.