Author Question: The higher the real wage rate, the higher the labor force participation rate. Indicate whether ... (Read 146 times)

naturalchemist · **on:** Jun 29, 2018

The higher the real wage rate, the higher the labor force participation rate.

Indicate whether the statement is true or false

Question 2

Consider the following scenario. Initially the economy has 90 million people working, 10 million people unemployed, and 20 million people not in the labor force. Then prospects for the economy improve.

Five million people who previously were not in the labor force now join the 10 million previously unemployed in looking for work. For now, the economy remains with 90 million workers. What happens to the unemployment rate?

duy1981999 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

TRUE

Answer to Question 2

The unemployment rate rises from 10.0 percent, (10 million unemployed) (100 million labor force) 100, to 14.3 percent, (15 million unemployed) (105 million labor force) 100.