Question

Disguised unemployment refers to the situation when _____________.

• A. people seems occupied on a full time basis even though the services they render require less than full time
• B. workers are underpaid despite doing full time job
• C. there is a co-existence of unemployment and inflation
• D. the economy experiences under employment equilibrium

Answer 1

Answer: (A)

people seems occupied on a full time basis even though the services they render require less than full time

Disguised unemployment refers to the employment of a person whose marginal productivity is zero, i.e, he does not contribute anything in the production process. If disguised unemployed people are withdrawn from a particular sector and transferred to other sector, the productivity of the sector will remain unaffected.