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2 June, 11:10

Assume you have the following information about an economy: Labor Force of an Economy Number of People (millions) Population over age 16 249.7 Labor force 157.2 Not in the labor force 92.5 Employed 148.2 Unemployed 9.0 Instructions: Round your answers to two decimal places. a. What is the unemployment rate in this economy? % b. What is the labor force participation rate? % c. Suppose that 1 million currently unemployed workers decide to no longer actively look for work. What is the unemployment rate in this economy now? % d. What is the new labor force participation rate? %

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  1. 2 June, 12:08
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    a. What is the unemployment rate in this economy?

    The formula is

    Unemployment Rate = Unemployed People / Labor Force

    Now, we plug the amounts into the formula:

    Unemployment Rate = 9.0 / 157.2

    = 0.0573

    = 5.73%

    b. What is the labor force participation rate?

    Labor Force Participation Rate = Labor Force / Population Over 16

    = 157.2 / 249.7

    = 0.6296

    = 62.96%

    c. Suppose that 1 million currently unemployed workers decide to no longer actively look for work. What is the unemployment rate in this economy now?

    1 million people have now left the labor force, and they also represent 1 million less unemployed.

    Unemployment Rate = 8.0 / 156.2

    = 0.0512

    = 5.12%

    d. What is the new labor force participation rate? %

    Labor Force Participation Rate = Labor Force / Population Over 16

    = 156.2 / 249.7

    = 0.6256

    = 62.56%
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