The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 22

Here's a simple example that allows you see how the unemployment rate can decrease when the economy grows worse and the number of discouraged workers increases. Suppose the number unemployed = 4 and the number employed = 4. The civilian labour force therefore = 8.
(a) What's the unemployment rate?
(b) Now suppose two people become discouraged workers and stop searching for work. What is the number unemployed?
(c) What is the number in the civilian labor force?
(d) What is the new unemployment rate?