Question

The unemployment rate may underestimate the true extent of unemployment if:
a. many people have part-time, as well as a full-time job.
b. there, are a large number of people working in the underground economy.
c. many people become discouraged and cease looking for work.
d. employees increase the number of hours they work overtime.

Answer 1

Answer:

c. many people become discouraged and cease looking for work.

Explanation:

The Bureau of Labor Statistics BLS computes the unemployment rate on a monthly. In calculating the unemployment rate, BLS considers the number of unemployed people divided by the labor force. The bureau defines an unemployed person as a jobless individual who is actively seeking employment.

The unemployment rate does reflect the true status of unemployment in the country. The definition of an unemployed person excludes individuals who have given up the search for work. Discouraged people and those not actively seeking work due to various reasons are not considered as unemployed. Therefore, the unemployment rate as presented by BLS is not an accurate measure of unemployment.