Sonja was out of a job for a year. She recently gave up looking for work because there were no jobs available.

Which of the following best describes the effect of Sonja exiting the labor market?

Choose 1 answer:
(A) The unemployment rate decreases
(B) The unemployment rate increases
(C) The unemployment rate will not change
(D) The labor force participation rate increases
(E) The size of the eligible population decreases

Question

Sonja was out of a job for a year. She recently gave up looking for work because there were no jobs available.

Which of the following best describes the effect of Sonja exiting the labor market?

Choose 1 answer:
(A) The unemployment rate decreases
(B) The unemployment rate increases
(C) The unemployment rate will not change
(D) The labor force participation rate increases
(E) The size of the eligible population decreases

Accepted Answer

***A*** ∻Key Concept∻ ⚹Unemployment Rate Calculation⚹ ∻Explanation∻ ⚹The unemployment rate decreases when individuals stop looking for work, as they are no longer counted as part of the labor force, which reduces the number of unemployed in the numerator of the unemployment rate formula.⚹◊What impact does Sonja's decision to exit the labor market have on the unemployment rate?⍭ Generate me a similar question◊

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