Question

This question is based on the following information about Springfield (assume all the citizens of Springfield are over the age of 16 and not institutionalized).

10,000 residents live in Springfield

7,000 Springfield residents are employed (including Homer Simpson)

2,000 Springfield residents are not employed and not looking for work

1,000 Springfield residents are not employed but are looking and available for work

What is the unemployment rate in Springfield?

		10%
		12.5%
		14.3%
		25%
		none of the above

Answer 1

12.5%

Unemployement rate = Unemployed persons / Labour force

Unemployed persons are those who don't have a job but are currently looking and available for job.

Therefore unemployed persons = 1000

Labour force = Unemployed persons + Employed persons

Labour force = 7000 +1000 = 8000

Unemployment rate = 1000 / 8000 = 0.125

Convert 0.125 into percent = 0.125 *100 = 12.5%

Note -

People not employed and not looking for job are neither included in unemployed persons nor in labor force.