Employed

86,000 Persons

Unemployed

14,000 Persons

Civilian Population

125,000 Persons

Total Population

150,000 Persons

The table above shows the labor-market data published by the government of a small hypothetical country. The natural rate of unemployment in this country is 4%. What is the labor-force participation rate in this country?

Question

Employed

86,000 Persons

Unemployed

14,000 Persons

Civilian Population

125,000 Persons

Total Population

150,000 Persons

The table above shows the labor-market data published by the government of a small hypothetical country. The natural rate of unemployment in this country is 4%. What is the labor-force participation rate in this country?

BlackTom AI · Accepted Answer

The problem provides labor-market data for a country and asks for the labor-force participation rate.
First, identify the components needed for LFPR: the labor force and the civilian population (the denominator).
From the table:
- Employed: 86,000
- Unemployed: 14,000
- Civilian population (non-institutional): 125,000
Total labor force equals employed plus unemployed: 86,000 + 14,000 = 100,000 people.
Next, compute the labor-force participation rate as LFPR = (labor force) / (civilian population).
Plugging in the numbers: LFPR = 100,000 / 125,000 = 0.80, or 80%.
Now evaluate the options:
- 65%: This would require a much smaller labor force or a larger civilian population than provided; it does not fit the data (labor force is 100,000, not 81,250).
- 75%: This implies a denominator or numerator that does not align with 100,000 divided by 125,000; 100,000 / 125,000 equals 80%, not 75%.
- 80%: This directly matches the calculation (100,000 ÷ 125,000 = 0.80).
- 85%: This would suggest a higher ratio than the data supports; the given numbers yield 80%, not 85%.
- None of the above: Since 80% precisely matches the calculation, this option is not correct.
The key idea is to ensure the labor force is correctly computed as employed plus unemployed, and the civilian population serves as the proper denominator for LFPR in standard labor-statistics definitions.
In summary, using the provided figures yields a labor-force participation rate of 80%, and the other percentages do not align with the computed ratio based on the given numbers.

ECN 001B B01-B04 FQ 2025 Final Examination

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