Thursday, February 4, 2010

Unemployment Rate

Summary: Two-minute drill.

The country of Alpha has a population of 450 residents. There are 5 residents in the military, 2 are retired, 3 are in prison, and 40 are under the age of 16. Calculate the civilian non-institutional population. In Alpha, there are 50 discouraged workers and 50 workers actively looking for work. Calculate the labor force, the unemployment rate, and the labor force participation rate.

Civilian Non-institutional Population is: 450 - 5 - 2 - 3 - 40 = 400

Labor Force is: 400 - 50 = 350

Unemployment rate is: 50/350 = 14.28%

Labor Force Participation Rate is: 350/400 = 87.5%

In your AP Macroeconomics class, you might want to discuss how different demographic groups are affected by unemployment. For example, teenagers typically have the highest unemployment rate. An interesting discussion topic might discuss measurement.

About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an author.


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