One Shortcoming of the Official Unemployment Rate Is That It

question 145

Multiple Choice

One shortcoming of the official unemployment rate is that it

• A) is very stable through recessions and is unreliable as an economic indicator.
• B) includes only workers who have no jobs and are actively seeking work.
• C) accounts for underemployed workers and discouraged workers.
• D) only indicates the length of unemployment.
• E) is unreliable because it is easily manipulated by the government.

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Definitions:

Excessive Risk

Engaging in financial activities that have a high chance of resulting in significant loss.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a firm can increase profits by increasing sales.

Degree of Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the level of fixed versus variable costs.

Modigliani-Miller Model

A theory on capital structure that suggests a firm's value is unaffected by its financing decisions under certain conditions.