Suppose that a well-respected study published in Child Psychology Today finds that a very high proportion of children raised by stay-at-home fathers are accepted to Harvard University.If a large number of previously working fathers quit their jobs and become stay-at-home dads,which of the following will occur,all else equal?
(i) The unemployment rate will decrease.
(ii) The size of the labor force will decrease.
(iii) The number of unemployed people will increase.
(iv) The unemployment rate will increase.
A)(i)and (ii)only
B)(ii)and (iv)only
C)(i), (ii),and (iii)only
D)(ii), (iii),and (iv)only

Question

Quizplus · Accepted Answer

If previously working fathers quit their jobs and become stay-at-home dads, the size of the labor force will decrease (ii). However, because they are not actively seeking employment, they will not be counted as unemployed, so the number of unemployed people will not increase (iii). As a result, the unemployment rate will increase (iv) because the number of employed individuals (numerator) will decrease while the labor force (denominator) will also decrease, leading to a higher unemployment rate. The accepted proportion of stay-at-home fathers' children to Harvard University has no direct impact on the labor market, so (i) is not affected.

Suppose That a Well-Respected Study Published in Child Psychology Today