A survey reveals that on a small island initially 40 people have jobs, 10 people are not working but looking for jobs, and 30 people are neither working nor looking for work. Suppose that 10 of the 30 people who weren't working or looking for work now begin looking for work. There are now 20 people without jobs but looking for work and 40 people working. The unemployment rate:
A)rises to 33.3%.
B)rises to 50%.
C)falls to 25%.
D)Nothing happens to the unemployment rate, because these people weren't working before and they aren't working now.

Question

Quizplus · Accepted Answer

The unemployment rate is calculated as the number of people without jobs but looking for work divided by the total labor force (people working + people looking for work). Initially, the labor force was 50 (40 working + 10 looking), and the unemployment rate was 20% (10/50). After 10 more people start looking for work, the labor force becomes 60 (40 working + 20 looking), and the unemployment rate rises to 33.3% (20/60).

A Survey Reveals That on a Small Island Initially 40