Question

Suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized as follows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million people who are either students, homemakers, retirees, or other people not seeking employment. Refer to Scenario 28-1. What is the unemployment rate? a. 3.3% b. 6.7% c. 10.7% d. 12%

Answer 1

Answer:

c. 10.7%

Step-by-step explanation:

The labor force is the sum of the number of employed and of unemployed people. Students, discouraged, retirees, etc are not part of the labor force.

The unemployment rate is the number of unemployed people divided by the size of the labor force.

In this problem, we have that:

25 million people employed, 3 million people unemployed.

Labor force = 25 + 3 = 28 million

Unemployed = 3 million

Unemployment rate = 3/28 = 0.107

The correct answer is:

c. 10.7%