Question

Matilda loses her job and decides to sit on the beach rather than look for work during the next few months. other things the same, the unemployment rate

A. and the labor-force participation rate both increase.
B. is unaffected, and the labor-force participation rate decreases.
C. is unaffected, and the labor-force participation rate increases.
D. increases, and the labor-force participation rate decreases.

Answer 1

When Matilda loses her job and decides to sit on the beach rather than look for work, the unemployment rate increases, and the labor-force participation rate decreases.

Step-by-step explanation:

The correct answer is D. When Matilda loses her job and decides to sit on the beach rather than look for work, the unemployment rate increases, and the labor-force participation rate decreases.

Unemployment rate is the percentage of the labor force that is unemployed and actively seeking employment. When Matilda loses her job and stops looking for work, she becomes unemployed and is counted in the unemployment rate.

Labor-force participation rate, on the other hand, is the percentage of the working-age population that is either employed or actively seeking employment. When Matilda stops looking for work, she is no longer counted in the labor-force participation rate, resulting in a decrease.