Consider a hypothetical economy in which the labor force consists of 100 people. Of those, 95 people are employed fulltime and 5 people are unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore, initially the unemployment rate is calculated as follows: Number Q'f Unemployed Peopl'e X 100 Number qr'PeopIe in rhe Labor Forte 5 mxl 5% UnempIm-'ment Rate Suppose a reduction in foreign demand for this economy's products causes an economic recessiona prolonged period of declining output. The following table offers two possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario desm'bes the only labor market changes in this economy. Scenario Unemployment Rate A: Firms reduce work hours by 20%. The number of involuntary parttime workers rises as rms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 32 hours per week. B: Firms reduce employment by 20%. The number of unemployed workers rises as rms respond to the reduction in the demand for their products by laying off 19 previously employed workers. True or False: The unemployment rate for scenario A in the previous table overstates the true extent of underemployment in the economy because the BLS counts parttime workers as employed. 0 True 0 False