QuestionJuly 29, 2025

New Government Employment and True Unemployment. Suppose the U.S. government hires workers who are currently unemployed but does not give them any work to do. What will happen to the measured U.S. unemployment rate? The unemployment rate will decrease Under these circumstances, do changes in the measured U.S. unemployment rate accurately reflect changes in the underlying economic situation and production? A. No. GDP will increase though the underlying economic situation will not have improved. B. Yes. GDP will increase and the underlying economic situation will have improved. C. No. GDP will remain unchanged and the underlying economic situation will not have improved. D. Yes. GDP will remain unchanged though the underlying economic situation will have improved.

New Government Employment and True Unemployment. Suppose the U.S. government hires workers who are currently unemployed but does not give them any work to do. What will happen to the measured U.S. unemployment rate? The unemployment rate will decrease Under these circumstances, do changes in the measured U.S. unemployment rate accurately reflect changes in the underlying economic situation and production? A. No. GDP will increase though the underlying economic situation will not have improved. B. Yes. GDP will increase and the underlying economic situation will have improved. C. No. GDP will remain unchanged and the underlying economic situation will not have improved. D. Yes. GDP will remain unchanged though the underlying economic situation will have improved.
New Government Employment and True Unemployment. Suppose the U.S. government hires workers who are currently
unemployed but does not give them any work to do. What will happen to the measured U.S. unemployment rate?
The unemployment rate will decrease
Under these circumstances, do changes in the measured U.S. unemployment rate accurately reflect changes in the underlying
economic situation and production?
A. No. GDP will increase though the underlying economic situation will not have improved.
B. Yes. GDP will increase and the underlying economic situation will have improved.
C. No. GDP will remain unchanged and the underlying economic situation will not have improved.
D. Yes. GDP will remain unchanged though the underlying economic situation will have improved.

Solution
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Answer

C. No. GDP will remain unchanged and the underlying economic situation will not have improved. Explanation 1. Analyze the impact on unemployment rate Hiring unemployed workers reduces the measured unemployment rate because they are no longer counted as unemployed. 2. Assess changes in GDP and economic situation Since these workers are not producing anything, GDP remains unchanged. The underlying economic situation does not improve because there is no increase in production or economic activity.

Explanation

1. Analyze the impact on unemployment rate<br /> Hiring unemployed workers reduces the measured unemployment rate because they are no longer counted as unemployed.<br /><br />2. Assess changes in GDP and economic situation<br /> Since these workers are not producing anything, GDP remains unchanged. The underlying economic situation does not improve because there is no increase in production or economic activity.
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