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Macroeconomics

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Unemployment and Discouraged Workers

MACRO-EKP9SU

Assume some individuals, having sought employment for several months, end their job search in frustration and discouragement. With this increase in the number of discouraged workers, what will happen to the labor force participation rate and the unemployment rate?

A

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

B

The labor force participation rate will remain unchanged and the unemployment rate will fall.

C

Neither the labor force participation rate nor the unemployment rate will change.

D

The labor force participation rate will decrease and the unemployment rate will remain unchanged.