Question

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

A. many people have a part time as well as a full time job.

B. there are a large number of people working in the underground economy.

C. many people become discouraged and cease looking for work.

D. employees increase the number of hours they work overtime.

Answer 1

Answer :- Option 'c' is the correct Answer

The unemployment rate may underestimate the true extent of unemployment if many people become discouraged and cease looking for work.

There is also one reason, many part-time employees would like to work full-time, but are unable to get the additional work.

People looking for full-time work who grudgingly settle for a part-time job are counted as employed, even though they are only "partly" employed.

Some people working in the underground economy could be counted in labor statistics as unemployed, while others may be counted as not in the labor force.

Unemployment rates can be quite different across different segments of the population, as well as varying substantially over time.

The duration of unemployment tends to be greater when the amount of unemployment is high, and smaller when the amount of unemployment is low.