Data for an economy shows that the unemployment rate is 5%, the participation rate is 60%, and 20 million people 15 years or older are not in the labour force. How many people are unemployed this economy?Group of answer choices1.8 million 0.6 million1.2 million1.5 million
Question
Data for an economy shows that the unemployment rate is 5%, the participation rate is 60%, and 20 million people 15 years or older are not in the labour force. How many people are unemployed this economy?Group of answer choices1.8 million 0.6 million1.2 million1.5 million
Solution
To solve this problem, we first need to find out the total number of people in the labor force.
We know that the participation rate is 60%, which means that 60% of the population 15 years or older is in the labor force.
We also know that 20 million people 15 years or older are not in the labor force. If these people represent 40% of the population (100% - 60% participation rate), we can find the total population by dividing 20 million by 40% (or 0.4).
Total population = 20 million / 0.4 = 50 million people
Now, we can find the number of people in the labor force by multiplying the total population by the participation rate:
Labor force = 50 million * 60% = 30 million people
Finally, we can find the number of unemployed people by multiplying the number of people in the labor force by the unemployment rate:
Unemployed people = 30 million * 5% = 1.5 million people
So, 1.5 million people are unemployed in this economy.
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