1.7. True or False (briefly explain): If an unemployed person quits looking for

Question

1.7. True or False (briefly explain): If an unemployed person quits looking for work, then, other things the same, the unemployment rate decreases and the labor force participation rate is unaffected.

1.8.. Fill in the blanks in the table below. Assume that the MPC (marginal propensity to consume) is constant over everyone in the economy. Briefly explain your work.

MPC Spending Change in government Change in output
multiplier spending (G)

____ 5 100 ________

_____ 2.5 _________ - 250

0.5 ______ 200 ________

0.2 _______ _________ 1000

Explanation / Answer

False-

if an unemployed person quits looking for work then other things the same, the unemployment rate and the labor-force participation rate is unaffected.

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