Question

1-

Excluding discouraged workers from the labor force causes

	a.	the unemployment rate to decrease.
	b.	labor productivity to increase.
	c.	the unemployment rate to increase.
	d.	the unemployment rate to remain the same.
	e.	labor productivity to decrease.

2-

Real GDP

	a.	will always change when prices change.
	b.	measures GDP minus depreciation of capital.
	c.	is GDP adjusted for changes in the price level.
	d.	is also called nominal GDP.

Answer 1

1) Unemployment Rate=( Number of people Unemployed/Labour Force)×100

Now if discouraged workers are excluded from Labour force, Labour Force will Decrease.

Decrease in denominator in the above formula would Increase the Fraction. Thus, Unemployment Rate would Increase.

Thus, Option c is correct. i.e, the Unemployment Rate to Increase.

2) Real GDP is adjusted for Changes in price level.

Real GDP= (Nominal GDP÷ Price Index)

Thus, Real GDP is adjuster for Changes in Price level as shown in the above formula.

Hence, Option c is correct.