Question

In 2013, there were approximately 155 million people in the labor force and the unemployment rate was 7.4 percent. If the unemployment rate had been 5 percent instead of 7.4 percent Instructions: Enter your response rounded to one decimal place. (a) how many more workers would have been employed? million (b) how many fewer would have been unemployed? millon

Answer 1

Answer:

(a) 3.7

(b) 3.7

Explanation:

The unemployment rate is calculated as the ration of unemployed workers over the labor force. The labor force is the total number of employed plus unemployed workers:

$Unemployment\,Rate=\frac{Unemployed\,Workers}{Labor\,Force}=\frac{Unemployed\,Workers}{Employed\,Workers+Unemployed\,Workers}$

Then if there were 155 million people in the labor force and 7.4% where unemployed that means that 11.47 million people where unemployed

$0.074=\frac{Unemployed\,Workers}{155}$

$Unemployed\,Workers=0.074*155=11.47$

If unemployment rate would have been 5% we have

$Unemployed\,Workers=0.05*155=7.75$

That means that 3.72 million fewer unemployed workers. Since Labor Force is the sum of unemployed and employed workers. The reduction in unemployment implies that they were now employed .