Suppose the population (age 16 and over) of Columbia is 40 million; 2 million are unemployed, and 23 million hold jobs. What are the rates of unemployment and labor force participation of Columbia?
A) Unemployment is 8 percent, and labor force participation is 62.5 percent.
B) Unemployment is 8.7 percent, and labor force participation is 92 percent.
C) Unemployment is 8.7 percent, and labor force participation is 62.5 percent.
D) Unemployment is 5 percent, and labor force participation is 57.5 percent.

Question

Quizplus · Accepted Answer

The labor force is the sum of employed and unemployed individuals, which in this case is 2 million (unemployed) + 23 million (employed) = 25 million.
The unemployment rate can be calculated as (unemployed / labor force) x 100, which is (2 million / 25 million) x 100 = 8 percent.
The labor force participation rate can be calculated as (labor force / population age 16 and over) x 100, which is (25 million / 40 million) x 100 = 62.5 percent.
Therefore, the best choice is A, which matches both the calculated unemployment rate and the labor force participation rate.

Suppose the Population (Age 16 and Over) of Columbia Is