Question

Fill in the blanks with appropriate options given in below.

Answer 1

Answer:

1. Excluding and 4. Understate

Explanation:

We know,

Unemployment rate = Unemployed people ÷ Total labor force

Here, the total labor force includes total employed and unemployed people minus out of the labor force and discouraged workers. Discouraged workers are those who either do not want to do the job because of a lack of a suitable position or do not look for a job. However, the U-4 measure of labor under-utilization includes the discouraged worker in the labor force.

Therefore, excluding discouraged workers from the official unemployment rate would understate the true extent of the official rate of underemployment.