Question

Matilda just graduated from college. In order to devote all her efforts to college, she didn’t hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate
a. increases and the labor-force participation rate decreases
b. and the labor-force participation rate both increase
c. increases and the labor-force participation rate is unaffected
d. and the labor-force participation rate are both unaffected

Answer 1

Answer:

Matilda is going to tour around the country on her motorcycle for a month before starting to look for work. Other things remain the same, the unemployment and the labor-force participation rate are both unaffected, Option D.

Explanation:

Labor-force participation rate is the 'percentage' of population that is economy's active workforce or the ones that are looking for work actively or are working. It is an important labor market measure.

Unemployment rate is the percentage of people who have no job. Workers that are discouraged reduce the labor force participation rate in case the unemployment is very high. In Matilda's case, she seems to be serious for her studies in college as she devoted all her efforts in college initially. Since she is going for a motorcycle tour before starting work, both unemployment and labor force participation rate remain unaffected as she is not actively looking for work and has just graduated.