Question

In the economy of Macroland 62.5 percent of the population is​ employed, while the unemployment rate is 6.0 percent.

Labor Force Participation Rate​ =

Answer 1

Labor Force Participation Rate​ measures the proportion of population which forms the labor force. Here we have the information that 62.5 percent of the population is​ employed. Let the population be 200. Then we have total number if employed = 62.5% x 200 = 125. If the unemployment rate is 6.0 percent, we have the required formula

6% = Unemployed/labor force

6% = Unemployed / (Employed + Unemployed)

6% = Unemployed / (125 + Unemployed)

7.5 = 0.94 x unemployed

Total unemployed is 7.97. Now labor force = 7.97 + 125 = 133 (approx). Hence Labor Force Participation Rate​ = Labor force / Population = 133/200 = 66.5%.