Practice question · Multiple choice
In some quarters a country’s unemployment rate falls while the number of people in work also falls. How can both happen at once?
Hints
- Write the rate as a fraction and ask what happens to each part.
- Discouragement moves someone out of the active population altogether.
Show the answer
B. People who stop actively seeking work become inactive, which shrinks the denominator faster than employment falls
Why
The rate is the unemployed over the employed plus the unemployed. Discouraged workers leave the numerator and the denominator at once, and the fraction can fall even as employment shrinks. This is why the employment rate, the employed as a share of the working-age population, is reported alongside it.
Practise Work and Labour Markets
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