Question

9 mark for review

	number of people (millions)
employed	135
unemployed	15

given the labor market data above, what are the labor - force participation rate (lfpr) and the unemployment rate (ur)?

(a) the lfpr is 60% and the ur is 6.0%.
(b) the lfpr is 54% and the ur is 6.0%.
(c) the lfpr is 54% and the ur is 10.0%.
(d) the lfpr is 60% and the ur is 10.0%.
(e) the lfpr is 60% and the ur is 3.3%.

Explanation:

Step1: Calculate the labor - force participation rate (LFPR)

The formula for LFPR is $\text{LFPR}=\frac{\text{Employed}+\text{Unemployed}}{\text{Civilian non - institutional population}}\times100\%$. The number of employed is 135 million, the number of unemployed is 15 million, and the civilian non - institutional population is 250 million. So, $\text{LFPR}=\frac{135 + 15}{250}\times100\%=\frac{150}{250}\times100\% = 60\%$.

Step2: Calculate the unemployment rate (UR)

The formula for UR is $\text{UR}=\frac{\text{Unemployed}}{\text{Employed}+\text{Unemployed}}\times100\%$. Substitute the values: $\text{UR}=\frac{15}{135 + 15}\times100\%=\frac{15}{150}\times100\%=10\%$.

Answer:

D. The LFPR is 60% and the UR is 10.0%