APFIVE Unemployment Rate Calculation
If the number of unemployed workers remains constant while the labor force shrinks due to a decline in labor force participation, what happens to the measured unemployment rate?
A
The unemployment rate increases because the ratio of unemployed to the smaller labor force rises.
B
It cannot be determined without knowing the total number of discouraged workers.
C
The unemployment rate decreases because fewer people are actively seeking employment.
D
There is no change in the unemployment rate since only the number of unemployed is considered.