Suppose initially that the working-age population is 220 million, the labor force is 150 million, and the official U-3 unemployment rate is 10 percent. 5 million new jobs are created and filled by 5 million people who had previously been discouraged workers. What is the new U-3 unemployment rate?
A) 6.25 percent
B) 6.7 percent
C) 8.7 percent
D) 9.7 percent

Question

Quizplus · Accepted Answer

The initial number of unemployed is 15 million (10% of 150 million). With 5 million discouraged workers now employed, the labor force becomes 155 million, and the unemployed remain 10 million. The new U-3 rate is (10/155)*100 = 6.45%, which rounds to 9.7%.

Suppose Initially That the Working-Age Population Is 220 Million, the Labor