Choose the given statement is true/false:

Disguised unemployment happens when the business cycle is down.

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True

False

answer is B.

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Detailed Solution

The above statement is false.
When individuals appear to be employed but are forced to do less than they are capable of, it is said to be underemployment, also known as disguised unemployment. In this situation, the person believes he is employed but is not. This type of unemployment is common in rural areas where agriculture is the primary source of income. Example: When five individuals are working on a plot of land that only needs three people to work on, an additional two workers are unemployed.
The correct statement would be, Disguised unemployment does not happen when the business cycle is down.

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