During the Great Recession, many news stories focused on a rising number of discouraged workers. The implication of many of these stories is that the unemployment situation was worse than indicated by the unemployment rate because of the existence of these discouraged workers.

(a) What are some of the reasons typically given for not including discouraged workers in the unemployment rate calculation?

(b) Show mathematically that if discouraged workers are treated as unemployed that the unemployment rate would increase.

(c) Show mathematically that the unemployment rate as defined by the Bureau of Labor Statistics would be lower if data on the underground economy was more available.