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Macroeconomics

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Moderate

Discouraged worker

MACRO-NI1EXJ

Assume an individual, not working but looking for work, becomes discouraged and stops looking for work.

Which of the following is TRUE?

A

The rate of unemployment will fall and the labor force participation rate will fall.

B

The rate of unemployment will increase and the labor force participation rate will fall.

C

Both the rate of unemployment and the rate of labor force participation will increase.

D

The rate of unemployment will increase and the rate of labor force participation will be unchanged.

E

Only the rate of employment will fall.