Question

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1. study questions and problems #5

indicate whether each scenario in the following table will lead the official bureau of labor statistics (bls) unemployment statistic to overstate or understate the true unemployment rate.
a person is working part - time but would like to work full - time.
a person falsely reports that she is actively looking for work because her current work engages in illegal activities.

Explanation:

• For the first scenario: The BLS counts part - time workers as employed. But since the person wants full - time work (underemployed), the official statistic understates the true unemployment rate (as there is hidden unemployment).
• For the second scenario: If a person falsely reports as unemployed (when they are actually working in illegal activities and should be counted as employed), the BLS statistic overstates the unemployment rate.

Answer:

1. Understate
2. Overstate