Question

Question

The labor force consists of:

Question options:

	all adults who are able to work.
	all adults who are working, plus those not working.
	discouraged workers, employed workers, plus those actively seeking work.
	all adults who are working or actively seeking work.

Question

The unemployment rate may underestimate the true extent of unemployment if:

Question options:

	there are a large number of people working in the underground economy.
	employees increase the number of hours they work overtime.
	many people become discouraged and cease looking for work.
	many people have a part time as well as a full time job.

Answer 1

1. Option D.

• The labour force consists of all the adults or people belonging to a working age class who are both employed and working or those who are actively searching for a job.
• It does not include discouraged workers who are neither working and are no longer seeking for any jobs.

2. Option C.

• The unemployment rate may underestimate the true extent of unemployment if many people become discouraged and cease looking for work.
• Many of the workers who were forced to drop out of the labour force due to some Unavoidable reason's are not considered as unemployed while unemployment refers to all those who are not having a job currently.
• Hence it is said to underestimate the true extent of unemployment.