Question

 4. Measuring employment, unemployment, and labor force participation

 Consider a small economy composed of six people: Van, Amy, Carlos, Deborah, Janet, and Felix. Each person's employment status is described in the following table.

 Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person's status as Employed, Unemployed, "Not in the labor force" but still part of the civilian noninstitutional population, or "Not in the civilian noninstitutional population" if not in the civilian noninstitutional population.

 Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.

 Labor Force Participation Rate = _______ 

 According to this formula, what is the labor force participation rate of this economy of six people?

 40%

 50%

 80%

 100%

 Complete the right half of the following equation to reflect the unemployment rate reported by the BLS.

 Unemployment Rate = _______ 

 According to this formula, what is the unemployment rate of this economy of six people?

 40%

 50%

 80%

 100%

Answer 1

Ans) Employed are those who are working for any pay or profit.

Unemployed are those who are not currently working anywhere but are actively looking for job. According to this definition those who are not actively looking for job are not considered as unemployed.

Labour force participation rate = (labour force ÷ civilian non institutionalised population)×100

Unemployment rate = (unemployed ÷ labour force)×100

Now, labour force = employed + unemployed

Civilian non institutional population are all people above the age of 16 and are not in any institution (mental, criminal etc) or in active duty of military.

So, Labour force = 4

Civilian non institutional population = 5

1) labour force participation rate = (4÷5)×100 = 80%

2) Unemployment rate = (2÷4)×100 = 50%