Question

4. Assume U3 increases from 4% to 8% from year x to year y. If U6 were 5% in year x would we expect U6 to be greater than or less than 9% in year y?

Answer 1

U3 is narrow measure of unemployment and it includes only those who are actively seeking employment. It does not include those who are underemployed and discouraged workers. U6 includes even underemployed and discouraged workers.

It might be that discouraged workers might actively seek employment, it will increase the U3 but not U6. Further, employed might become unemployed, it will affect both equally.

Thus, Most probably, U6 would be less than 9 % in year Y.