First, provide a brief explanation of what the unemployment rate measures. Second, explain how changes in each of the components of the unemployment rate can cause changes in the unemployment rate
What will be an ideal response?
The unemployment rate measures the percentage of the labor force that is unemployed. The unemployment rate is based on a monthly survey of households. Individuals are classified as employed, unemployed, or out of the labor force. Individuals employed or unemployed are in the labor force. Suppose individuals decide to enter the labor force for the first time. This increase in the size of the labor force, all else fixed, would cause an increase in the unemployment rate.
On the other hand, if there were an increase in the number of individuals unemployed (caused by, for example, firms laying off workers as demand for their products falls), we would observe no change in the labor force but an increase in the unemployment rate.
You might also like to view...
An increase in the real interest rate results in a
A) rightward shift in the supply of loanable funds curve. B) leftward shift in the supply of loanable funds curve. C) movement along the supply of loanable funds curve. D) none of the above.
Select the graph above that best shows the change in the market specified in the following situation: In the market for leather coats, when leather coats become more fashionable among young consumers.
a. Graph A b. Graph B c. Graph C d. Graph D