Aa Aa By keeping track of discouraged workers and involuntary part-time workers,

Question

Aa Aa By keeping track of discouraged workers and involuntary part-time workers, the Bureau of Labor Statistics (BLS) gets a clearer picture of the true employment situation than if it looked at only the number of unemployed workers. Which of the following statements correctly describe discouraged workers? Check all that apply They are available for work. They are employed workers who want to earn higher wages. They have not looked for work during the past four weeks. They would like to have jobs. Consider a hypothetical economy in which the labor force consists of 100 people. Of those, 95 people are employed full-time and 5 people are unemployed. The government of this economy follows the same conventions as the BLS in computing its employment figures. The unemployment rate is simply the number of unemployed people divided by the number of people in the labor force. Initially, then, the unemployment rate is (5/100) x 1009,-5.0%. Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two different possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario. Unemployment Rate rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 30 hours per week. Firms reduce employment by 25%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 24 previously employed workers. B. | the true extent of in the economy, The unemployment rate in scenario A because the BLS counts part-time wor understates overstates QNA 3.16 2004-2016 Aplia. All rights reserved. 2013 Cengage Learming except as noted. All nghts

Explanation / Answer

Correct Options are:
->They are available for work.
->They have not looked for work during the past four weeks.
->They would like to have jobs.

In scenario A, some full-time workers have become oart time workers but no one has become unemployed.so, the unemployment rate will remian the same (5%).

In scenario B, firms lay-off 24 employees. Therefore, the no. of employed workers reduces from 95 to 71 and the number of unemployed increases from 5 to 29.
Therefore, unemployment rate=29/100*100=29%.

Understates-As the unemployment rate gives a smaller picture of underemployed workers (as the underemployed part time workers are taken as employed as per BLS).

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