A decrease in the labour force participation rate
A)implies that the unemployment rate must fall.
B)implies that the unemployment rate must rise.
C)means there are more discouraged workers.
D)is consistent with either a rise or a fall in the unemployment rate.

Question

Quizplus · Accepted Answer

A decrease in the labour force participation rate means that fewer people are actively looking for work. This could be because they have given up looking for work (discouraged workers), or because they have found other ways to support themselves. It does not necessarily mean that the unemployment rate will rise or fall.

A Decrease in the Labour Force Participation Rate