In September there are 10,000 people classified as unemployed and the size of th

Question

In September there are 10,000 people classified as unemployed and the size of the labor force is 400,000. The only change between September and October is that 4,000 of the unemployed give up looking for work. Which of the following is true?

In September the unemployment rate was 1.75% and in October the unemployment rate was 0.75%.

In September the unemployment rate was 4% and in October the unemployment rate was 1%.

In September the unemployment rate was 2.5% and in October the unemployment rate was 1.5%.

In September the unemployment rate was 5% and in October the unemployment rate was 4%.

In September the unemployment rate was 1.75% and in October the unemployment rate was 0.75%.

In September the unemployment rate was 4% and in October the unemployment rate was 1%.

In September the unemployment rate was 2.5% and in October the unemployment rate was 1.5%.

In September the unemployment rate was 5% and in October the unemployment rate was 4%.

Explanation / Answer

"C",

The unemployment rate is calculated as a ( number of people unemployed / labor force ) x 100. So, in September the unemployment rate was (10,000 /400,000) x 100 = 2.5%.

People who left searching for jobs are not considered as unemployed and they are not part of the unemployed labor force. This will reduce the unemployed labor force. (6000/400,000) x100 = 1.5%. The answer is C.

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