Asked Mar 24, 2019

What are two issues with the unemployment rate in any given area?


Expert Answer

Step 1

Let us discuss certain concepts related to unemployment rate:

Employed: Those people who belong to the labor force and are working belong to the employed category.

Unemployed: This includes the people who are willing and able to work but do not possess job.

Labor force: In an economy, labor force refers to the part of the working age population (aged 15-69) that is willing and able to work. It is the sum of employed and unemployed people.

Unemployment: Unemployment refers to the situation where people in the working age population (aged 16-59) are willing and able to work but cannot find work.

Unemployment rate: It is the number of people unemployed as a percentage of labor force. It is calculated using the formula below:

Step 2

The two issues with unemployment rate in any given area are:

1.Unemployment rate does not include discouraged workers: Discouraged workers are those who are unemployed but no longer seek employment because they are not able to find desirable jobs or wages. Though these people still do not have jobs, they are not anymore counted as unemployed. Thus, unemployment rate as a measure of joblessness understates the situation of joblessness due to disregard for discouraged wor...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in



Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: In the quantity theory equation (in terms of growth rates), we have , where is the inflation rate, i...

A: Assume that,P = Inflation rate / Price levelM = Money supply,V = Velocity, and Y = GDPTherefore, Acc...


Q: A firm believes the elasticity of demand it faces in its own country is -1.1 and in the other countr...

A: We are given that the firm in question sells its products in two different markets i.e. domestic mar...


Q: If the Federal Reserve conducts a $10 million open-market sale and the reserve requirement is 20%, t...

A: Monetary base:Monetary base can be calculated as follows:


Q: Suppose a new regulation lowers the interest rates banks can offer on checking account funds. This w...

A: Money demand is the demand for cash balances by the individuals in the economy.Money supply is the t...


Q: In the US in 2008, several large banks collapsed when risky financial investments began to fail. Des...

A: The U.S. in 2008 suffered from the great financial crisis where several U.S. banks were collapsed du...


Q: 13 If a 10% decrease in the price of gas causes a 30% increase in the demand for standard sized auto...

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any spec...


Q: We often work with production technologies that give rise to initially increasing marginal product o...

A: Production technology:True, because the slope of the production frontier is equal to the marginal pr...


Q: What will be the firms total profit?

A: In Perfect competition, the firm is in equilbrium where the MC curve cuts MR curve below. Here, MR a...


Q: thank you

A: Answer 1:Here, it given that, Y1 = $40 K, Y2 = $60 K, Q1 = 24 boxes, and Q2 = 6 boxeswhere Y1, Y2 de...