How does the presence of an underground labor market bias the government's calculation of the labor force participation rate?
A. The official government statistic on labor force participation is too high because people working in the underground labor market should be counted as being in the labor market but unemployed.
B. The official government statistic on labor force participation is identical to actual labor market participation whether or not there is an underground labor market.
C. The official government statistic on labor force participation is too low because people working in the underground labor market should not be counted as being in the labor market.
D. The official government statistic on labor force participation is too high because people working in the underground labor market should not be counted as being in the labor market.
E. The official government statistic on labor force participation is too low because people working in the underground labor market should be counted as being in the labor market and employed.
Answer: E
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A) 0.38 percent B) 9.0 percent C) 3.8 percent D) 8.3 percent
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When employment discrimination results from the personal prejudices of employers, economic theory suggests that
a. it is costless for employers to discriminate against groups they do not like. b. the wages of employees who are discriminated against will actually rise. c. an employer who discriminates will experience higher costs. d. discrimination by an employer will reduce production costs since the employer can pay lower wages.
At the broadest level, the financial system moves the economy's scarce resources from
a. the rich to the poor. b. financial institutions to business firms and government. c. households to financial institutions. d. savers to borrowers.