If the number of employed workers in a country increases while its population does not change, then the unemployment rate in the country
Select all that apply.
2 marksMacroeconomicsInflation, unemployment and the Phillips curveMeasuring unemploymentModerateabout 2 min
IIT JAM 2021 Question 39: Inflation, unemployment and the Phillips curve
Answer and worked solution
Answer: (C) and (D)
More employed workers does not pin down the unemployment rate, because the labour force can also change. If previously inactive people enter the labour force and some remain unemployed, the rate can rise; if the unemployed simply find jobs, the rate falls.
Since both outcomes are possible, the rate may increase or may decrease, so the correct statements are (C) and (D), not the always-claims in (A) or (B).
The trap: (B) will always decrease
A rise in employment need not lower the unemployment rate: if the labour force expands faster, the number unemployed can rise too, so the direction is not fixed.
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What this question tests
This question is on Measuring unemployment, part of Inflation, unemployment and the Phillips curve in Macroeconomics.
How the unemployment rate is defined and computed, and the types of unemployment.
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