Question

Consider the following information about an economy. 7 milion individuals in this economy are unemployed. 93 million individuals in this economy are employod. There are 2 milion discouraged workers in this economy. The unemployment rate in this economy equals:

a. 93 percent
b. 9 percent
c. 7 percent
d. 2 percent

Answer 1

The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force and then multiplying by 100 to get a percentage. For this economy, it is (7 million / 100 million) * 100, resulting in an unemployment rate of 7 percent.

Step-by-step explanation:

To calculate the unemployment rate, we need to consider only the number of people who are either employed or unemployed, which is the labor force. Discouraged workers are not counted in the labor force since they are not actively seeking employment. Hence, we have 7 million unemployed people, and 93 million employed people, totalling a labor force of 100 million individuals.

Step 1. First, we divide the number of unemployed people (7 million) by the total labor force (100 million).

Step 2. Then, we multiply the resulting number by 100 to convert it to a percentage.

The calculation: (7 million / 100 million) * 100 = 7 percent. So, the unemployment rate in this economy is 7 percent, which corresponds to option c.