Suppose initially that the working- age population is 220 million, the labor force is 150 million, and the unemployment rate is 10 percent. 5 million new jobs are created and filled by 5 million people who had previously been discouraged workers. What is the new unemployment rate?
A) 6.7 percent
B) 9.7 percent
C) 6.25 percent
D) 8.7 percent

Question

Quizplus · Accepted Answer

Initially, the number of unemployed is 15 million (10% of 150 million). With 5 million discouraged workers joining the labor force and getting jobs, the labor force becomes 155 million, and the unemployed remain 15 million. The new unemployment rate is (15/155) * 100 = 9.7 percent.

Suppose Initially That the Working- Age Population Is 220 Million