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Assume that many people who once sought employment or worked no longer do either. With all other factors being the same, this results in a decrease in the work force and unemployment rates. The right answer is (c).
An estimation of the size of the labor force in an economy is the labor force participation rate. The calculation is the proportion of the working-age non-institutionalized population, aged 16 and older, who are employed or actively looking for work. According to Lord William Beveridge, "full employment" is when there are as many open positions as there are unemployed employees. For maximum economic output, he preferred that the economy be sustained above the point of full employment.
The percentage of workers in the labor force who do not currently have a job but are actively seeking one is measured by the unemployment rate. This statistic excludes people who have not sought for job in the last four weeks. The labor force is made up of both employed people and unemployed people, and the unemployment rate is calculated by dividing the number of jobless people by the total labor force. If a person works for compensation or runs their own business for at least an hour any day of the week, including the twelfth of the month, they are regarded to be employed.
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