The labor force participation rate __________ , and the unemployment rate __________ when a person quits his job to become a stay-at-home parent.

The correct response is that the labor force participation rate falls, and the unemployment rate rises when a person quits their job to become a stay-at-home parent.

When an individual chooses to leave their job, the labor force participation rate decreases because this metric reflects the proportion of working-age individuals who are either employed or actively seeking work. By quitting their job to become a stay-at-home parent, this individual is no longer participating in the labor force, leading to a lower participation rate.

On the other hand, the unemployment rate reflects the percentage of the active labor force that is unemployed but actively seeking employment. Since the person is no longer looking for work after quitting their job but is not employed, they are not counted in the unemployment statistics. Thus, their action of quitting does not contribute to an increase in the unemployment rate. However, under specific interpretations of the terms, you might argue about the nuances of unemployment if the individual is considered as having 'stopped looking' for employment in a way, but typically, their choice to become a stay-at-home parent leads to an overall decrease in active job-seeking status.

The combination of these outcomes means that the first part is true (labor force participation falls), while the characterization of the unemployment rate may