Assume that you have the following information about an economy: - Population ov

Question

Assume that you have the following information about an economy:

- Population over the age of 16: 249.7 Million

-Labor Force: 157.2 Million

-Not in the Labor Force: 92.5 Million

- Employed: 148.2 Million

- Unemployed: 9.0

A) What is the unemployment rate of 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 of the economy now?

D) What is the new labor force participation rate?

Explanation / Answer

unemployment rate isunemployment rate = number of unemployedpersons / labor force = 9/157.2 = 5.72%

Labor force participation rate = labor force/population = 157.2/249.7= 62.95%

Unemployment rate = 8/156.2 = 5.12%

New labor force participation rate = 156.2/249.7 = 62.55%

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