Consider an economy where the rate of unemployment is 6%, the adult population is 40 million...

Consider an economy where the rate of unemployment is 6%, the adult population is 40 million and the number of employed is 24 million. Then the labour force participation rate is equal to:

Select one:

a. 65.50%

b. 67.28%

c. 70.52%

d. 63.82%

Solutions

Expert Solution

Greetings for the day,

Given information:

Adult population (working age population) = 40 million

Employed population = 24 million

Rate of Unemployment = 6%

Formula to calculate the labour force participation rate:

LFPR (%) = Persons employed + persons unemployed x 100

Working-age population

We have employed population i.e. 24 million and that is equal to 94% of the total because we have 6% unemployment rate so calculate the 100% amount or the total population.

Now let’s calculate the total population by using the rate of unemployed:

Now putting the value of total population (employed + unemployed) in the above formula: (I am taking the complete value after a point but you can take up to 3 values):

The correct answer is an option (D) i.e. 63.82%

Rahul Sunny answered 1 year ago

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