Problems with interpreting the unemployment rate as a measure of labour market tightness include
A) biases in the CPI and dissatisfied workers.
B) dissatisfied workers and discouraged workers.
C) discouraged workers and variations in how intensively the unemployed search for work.
D) variations in how intensively the unemployed search for work and biases in the CPI.
E) the rental vacancy rate.

Question

Quizplus · Accepted Answer

The unemployment rate does not take into account discouraged workers who have stopped actively seeking employment, nor does it account for variations in how intensively job seekers are searching for work. This means that the unemployment rate may not accurately reflect the true state of labor market tightness. Biases in the CPI and dissatisfied workers are not directly related to the unemployment rate as a measure of labor market tightness. The rental vacancy rate is also not directly related to the unemployment rate as a measure of labor market tightness.

Problems with Interpreting the Unemployment Rate as a Measure of Labour