Question

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

Answer 1

Unemployment rate would decrease.

Step-by-step explanation:

• This is a worrying situation to any country: decreasing unemployment rate, because people who does not look for a job is not considered unemployed, and not because there is more hired people.

• To be unemployed one must be actively looking for a job, which means must apply for jobs, must search opportunities, etc. When people stop looking, they are not longer considered unemployed by defintion, but Discouraged Workers.

• Unemployment rate (U) is calculated as indicated:
  `U=(Unemployed)/(Labor Force) *100`.
• If unemployed people give up and stop looking for a job, they are still part of labor force, but they are not longer considered unmeployed, which yields in lower uneployment rates.