Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200 million people 16 years or older are not in the labor force.How many people are in the labor force in this economy?
A)80 million
B)200 million
C)800 million
D)1.0 billion

Question

Quizplus · Accepted Answer

The participation rate is the percentage of the working-age population that is part of the labor force. If 200 million people are not in the labor force, then 80% of the working-age population is in the labor force. Therefore, the total working-age population is 200 million / (1 - 0.8) = 1 billion. The labor force is 80% of 1 billion, which is 800 million.

Data for an Economy Shows That the Unemployment Rate Is