Question

Suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized as follows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million people who are either students, homemakers, retirees, or other people not seeking employment. Refer to Scenario 28-1. What is the labor-force participation rate? a. 83.3% b. 86.7% c. 93.3% d. 96.7%

Answer 1

c. 93.3%

Explanation:

The formula and the computation of the labor-force participation rate is shown below:

Labor-force participation rate = Labor force ÷ Adult population

where,

Labor force = Employed people + unemployed people

= 25 million + 3 million

= 28 million

And, the adult population is

= 25 million + 3 million + 1 million + 1 million

= 30 million

So, the labor force participation rate is

= 28 million ÷ 30 million

= 93.3%