Question

Case 2

The labor force is 100 million and the unemployment rate is 5 percent. Due to a long recession, one million unemployed workers stopped looking for a job. WAP is 150 million.

Calculate the new unemployment rate. *

4 points

4.040%

4.202%

4.264%

4.317%

Calculate the new employment rate. *

4 points

76.000%

82.333%

88.667%

63.333%

Calculate the new LFPR. *

4 points

79.333%

86.000%

66.000%

92.667%

Forms

Answer 1

1. Calculation of New Unemployment Rate

Unemployment Rate

= (Total Unemployed / Total Labor Force ) * 100

Previous Unemployment Rate = 5%

5/100 = Total Unemployed / 100

Total Unemployed ( old figure ) = 5 Million

Due to recession 1 million people have stopped looking work. So these will not neither be considered as unemployed nor counted into labor force.

New Unemployed = 5 - 1 = 4 Million

Labor force ( New figure) = 100 - 1= 99 million

New Unemployment Rate = 4/99 * 100 = 4.040%

Option A is correct.

2. Calculation of New Employment Rate

Employment Rate = Total Employed / Total Working Age Population * 100

Total Employed = Total Labor force - Total Unemployed

= 99 - 4 = 95 Million

New Employment Rate = 95 / 150 * 100 = 63.333%

Option D is Correct.

3. Labor force Participation Rate

= Total Labor Force / Total Working Age Population * 100

= 99 / 150 * 100

= 66.000%

So, Correct Option is Option C.

Working-age population is the number of civilian, non-institutionalized persons, age 16 and over.