Question

True or False. If the Employed Persons Figure increases, the unemployment rate must decrease. [2 marks]

Answer 1

True

Unemployment rate is the ratio of unemployed people divided by the labour force. Where labour force is the population in working which is able and also willing to work. Labour force includes both the employed and unemployed people so that so that if the employed people increases the unemployed population of the labour force decreases so does the numerator of the unemployment rate. Such that unemployment rate must decrease.

If people is leaving the labour force as this can be happened in a case where people are voluntarily unemployed means they are able to work and also has work but they dont want to work do that such type of people will not be counted as unemployed and will not be a part of labour force. So that even then the result will be that unemployment rate will decrease because unemployed population in numerator will decrease in the same proportion as in the labour force.