Suppose That Some People Report Themselves as Unemployed When,in Fact,they

question 17

Multiple Choice

Suppose that some people report themselves as unemployed when,in fact,they are working in the underground economy.If these persons were counted as employed,then

• A)both the unemployment rate and labor-force participation rate would be higher.
• B)both the unemployment rate and labor-force participation rate would be lower.
• C)the unemployment rate would be higher,and the labor-force participation rate would be higher.
• D)the unemployment rate would be lower,and the labor-force participation rate would be unaffected.

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Definitions:

Taxable Income

The amount of income that is subject to tax, after all deductions and exemptions are taken into account.

Intervals

Periods of time between events; in finance, it may refer to the frequency with which interest is applied or compounded.

Income Tax

Taxes that are based on the amount of taxable income that you earn.

Earned Income

Income derived from active participation in a business or trade, typically including wages, salaries, commissions, and tips.