Answer:
The unemployment rate is measured by dividing the economically active unemployed population seeking employment divided by the total economically active population.
In this case 10,000 / (90,000 + 10,000) = 10%
If of these 4,000 unemployed people did not want to work, they would cease to be part of the economically active population, this decreases the number of the rate since the formula will be 6,000 (unemployed looking for employment) / (90,000 + 6,000) (it is the total of economically active population)
= 6.25%
This is bad for the economy because the unemployment rate underestimates the true level of unemployment in force and, therefore, gives a wrong picture of reality, as it shows that the situation is not as bad as it really is. Since these people could belong to the economically active population, but they are out of it because they have not found work and decided to cancel their search.
