Chapter 5, Problem 1SPA

(a)

To determine

Identify the unemployment rate.

Explanation of Solution

The unemployment rate can be calculated using the formula given below:

$\text{Unemployment rate }=\frac{\text{Number of people unemployed}}{\text{Labor force }}\times 100$        (1)

The labor force is the sum of the unemployed group and the employed group. Therefore, since the total labor force is 160 million and the employment is 152 million, the number of people unemployed is 8 million $\left(160\text{million}-152\text{million}\right)$.

Substitute the values in Eqution-1 to get the value of unemployment rate as follows:

$\begin{array}{c}\text{Unemployment rate }=\frac{\text{8million}}{\text{160 million }}\times 100\\ =5\%\end{array}$

Thus, the unemployment rate is 5%.

Economics Concept Introduction

Unemployment rate: The unemployment rate indicates the percentage of population that is without jobs but actively seeking employment. 

(b)

To determine

Identify the labor force participation rate.

Explanation of Solution

Since the working age population is 254 million and the labor force is 160 million, the labor force participation rate can be calculated as follows:

$\begin{array}{c}\text{Labor force partcipation rate }=\frac{\text{Labor force}}{\text{ Working age population}}\times 100\\ =\frac{160\text{ million}}{254\text{million}}\times 100\\ =62.99\%\end{array}$       

Thus, the labor force participation rate is around 63%.

Economics Concept Introduction

Labor force participation rate: The labor force participation rate indicates the percentage of the population that is in the labor force.

(c)

To determine

Identify the employment-to-population rate.

Explanation of Solution

Since the working age population is 254 million and the number of people employed is 152 million, the employment-to-population rate can be calculated as follows:

$\begin{array}{c}\text{Employment-to-population rate }=\frac{\text{Number of people employed}}{\text{ Working age population}}\times 100\\ =\frac{\text{152 million}}{254\text{million}}\times 100\\ =59.8\%\end{array}$                

Thus, the employment-to-population rate is 59.8%.

Economics Concept Introduction

Employment-to-population ratio: The employment-to-population ratio indicates employment as a percentage of working age population.