Assume that the total labor force is 100 individuals with 10 unemployed. The unemployment rate is____________ . Now assume that 10 people drop out of the labor force and that 10 remain unemployed. The new unemployment rate is __________.
A) 10 percent, 9 percent
B) 11 percent, 10 percent
C) 10 percent, 11 percent
D) 9 percent, 10 percent

Question

Quizplus · Accepted Answer

The initial unemployment rate is (10/100) x 100 = 10%. 
After 10 people drop out of the labor force, the new labor force size is 100-10 = 90 individuals. The new unemployment rate is (10/90) x 100 = 11.11%, which is 11% when rounded to the nearest whole number. Therefore, the new unemployment rate is 11%, which is option C.

Assume That the Total Labor Force Is 100 Individuals with 10