1. There is one scenario where the unemployment rate would probably be underesti
ID: 1179118 • Letter: 1
Question
1. There is one scenario where the unemployment rate would probably be underestimated due to the discouraged worker effect. One where the rate would probably be underestimated due to underemployment. One scenario where the rate would probably be overestimated due to the underground economy and one where the rate would probably be overestimated due to government encouraged unemployment. There is also one scenario with none of these errors and the unemployment rate is probably accurate. Identify which for each scenario.
Corporation X lays off 500 skilled workers when general unemployment is low.
Unemployment benefits and time of eligibility are raised while unemployment is low.
Corporation X reduces the hours for 500 unskilled workers.
Country Y has little ability to track jobs and income, and has high taxes.
Corporation X lays off 500 unskilled workers when unemployment is extremely high.
Explanation / Answer
unemployment rate would probably be underestimated due to the discouraged worker effect
Corporation X lays off 500 unskilled workers when unemployment is extremely high.
rate would probably be underestimated due to underemployment
Corporation X reduces the hours for 500 unskilled workers.
rate would probably be overestimated due to the underground economy
Country Y has little ability to track jobs and income, and has high taxes.
one where the rate would probably be overestimated due to government encouraged unemployment
Unemployment benefits and time of eligibility are raised while unemployment is low.
the unemployment rate is probably accurate
Corporation X lays off 500 skilled workers when general unemployment is low.
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