Data for an economy shows that the unemployment rate is 6%, the participation rate 60 percent, and 200 million people 16 years or older are not in the labor force. How many people are unemployed this economy?
A) 12.0 million
B) 18.0 million
C) 28.8 million
D) 43.2 million

Question

Quizplus · Accepted Answer

To find the number of unemployed people, first calculate the labor force. If 200 million people are not in the labor force, then 40% (100% - 60% participation rate) of the population is not in the labor force. Therefore, the total population is 200 million / 0.40 = 500 million. The labor force is 60% of 500 million, which is 300 million. With a 6% unemployment rate, the number of unemployed people is 6% of 300 million, which is 18 million.

Data for an Economy Shows That the Unemployment Rate Is