Question

1) How is the labour-force participation rate defined?

A	(Employed ÷ Adult population) × 100
B	(Adult population ÷ Labour force) × 100
C	(Labour force ÷ Adult population) × 100
D	(Employed ÷ Labour force) × 100

2) A foreign governmental statistics agency recently reported that there were 37.6 million people over age 25 who had at least a bachelor's degree. Of this number, 28.0 million were in the labour force and 25.9 million were employed. What was the unemployment rate in this group?

A	about 7.5 percent
B	about 7.7 percent
C	about 31.1 percent
D	about 5.6 percent

3) Geoff loses his job in May and decides to spend his summer fishing. Assuming that other things remain the same, what happens to the unemployment rate?

	The unemployment rate decreases because he is not in the labour force anymore.
	The unemployment rate decreases because he is still in the labour force.
	The unemployment rate increases because he is still in the labour force.
	The unemployment rate increases because he is not in the labour force anymore.

4) Prime Minister Bigego is running for re-election against Finance Minister Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. What can you conclude?

A	Both of them could be telling the truth if the labour force grew slower than employment.
B	Both of them could be telling the truth if the labour-force participation rate and the labour force both grew.
C	Both of them could be telling the truth if the labour force grew faster than employment.
D	Both of them could be telling the truth if the labour-force participation rate and the labour force both fell.

Answer 1

1. Labour force participation rate = Labour force / adult population * 100 where labour force is the sum of those employed and unemployed.

2. Unemployment rate = number of unemployed/ labour force

Number of unemployed = 28 - 25.9

= 2.1 million

Unemployment rate = 2.1/ 28 * 100

= 7.5 %

3. Unemployment rate increases because he is unemployed and is no more in the labor force. People who are in the labour force are those who are unemployed and are actively searching for a job for past 4 weeks. Since Geoff is not searching for a job, he is out of the labor force. Hence, labour force decreases and the number of unemployed remains the same. Thus, unemployment rate increases.

4. Both of them could be telling the truth if the labour force have increased. Labour force includes the number of people who are both empolyed and unemployed. When Bigego proclaims that more people are working now, it could be as a result of the increase in labour force. When Pander says that unemployment rate has gone high, it could also be as a result of the increase in labour force.