Consider a small economy where the total population is 10 000 The size of the labor force is 8 000 w...........

Economics- Phase (I & II) IS-LM

Consider a small economy where the total population is 10,000. The size of the labor force is 8,000, while the number of people employed is 7,000. What is the unemployment rate in this economy

10%

12.5%

20%

30%

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Explanation:

Given the labor force of 8,000 people, 1000 people are unemployed. Thus the unemployment rate is (1,000/8,000)*100 = 12.5%. The number of people in the entire population is irrelevant for this question.