Assume you have the following information about an economy: Labor Force of an Economy Number of People (millions) Population over age 16 249.7 Labor force 157.2 Not in the labor force 92.5 Employed 148.2 Unemployed 9.0 Instructions: Round your answers to two decimal places. a. What is the unemployment rate in this economy? % b. What is the labor force participation rate? % c. Suppose that 1 million currently unemployed workers decide to no longer actively look for work. What is the unemployment rate in this economy now? % d. What is the new labor force participation rate? %

a. What is the unemployment rate in this economy?

The formula is

Unemployment Rate = Unemployed People / Labor Force

Now, we plug the amounts into the formula:

Unemployment Rate = 9.0 / 157.2

= 0.0573

= 5.73%

b. What is the labor force participation rate?

Labor Force Participation Rate = Labor Force / Population Over 16

= 157.2 / 249.7

= 0.6296

= 62.96%

c. Suppose that 1 million currently unemployed workers decide to no longer actively look for work. What is the unemployment rate in this economy now?

1 million people have now left the labor force, and they also represent 1 million less unemployed.

Unemployment Rate = 8.0 / 156.2

= 0.0512

= 5.12%

d. What is the new labor force participation rate? %

Labor Force Participation Rate = Labor Force / Population Over 16

= 156.2 / 249.7

= 0.6256

= 62.56%