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

question 86

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, how would the labour statistics change?

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

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Definitions:

Empirical Method

A way of gaining knowledge by means of direct and indirect observation or experience.

Type I Error

In research, the mistake of thinking that one variable has an effect on, or relationship with, another variable, when really it does not.

Factor Analytically Derived

Factor analytically derived refers to constructs or variables identified through factor analysis, a statistical method used to explore underlying relationships among observed measures.

Communication Process

The exchange of information between a sender and a receiver through a medium, involving encoding, transmission, decoding, and feedback.