Calculate the unemployment rate by including discouraged

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Reference no: EM131007754

Suppose that the BLS gathers the following data (purely hypothetical for illustrative purposes):

Labor force = 100

Unemployed = 10

Discouraged workers = 5

a. Calculate the official unemployment rate (called “U-3”).

b. Calculate the unemployment rate by including discouraged workers as unemployed and in the labor force (this is called “U-6”).

c. Which unemployment rate is larger?

(For thought: Which method of calculating the unemployment rate would politicians in the majority party emphasize? Which method of calculating the unemployment rate would politicians in the minority party emphasize?)

Reference no: EM131007754

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