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 choices
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 choices
Solution
To find the number of unemployed people, we first need to find the total labor force.
Step 1: Calculate the total population The participation rate is the percentage of the total population that is in the labor force. If 60% of the total population is in the labor force, then the total population can be calculated as follows: Total population = Number of people not in the labor force / (1 - Participation rate) Total population = 20 million / (1 - 0.60) = 50 million
Step 2: Calculate the total labor force The total labor force is the percentage of the total population that is either employed or unemployed. It can be calculated as follows: Total labor force = Total population * Participation rate Total labor force = 50 million * 0.60 = 30 million
Step 3: Calculate the number of unemployed people The unemployment rate is the percentage of the labor force that is unemployed. It can be calculated as follows: Number of unemployed people = Total labor force * Unemployment rate Number of unemployed people = 30 million * 0.05 = 1.5 million
So, there are 1.5 million people unemployed in this economy.
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