In an economy, 760 people are working, 40 people are not working but are looking for jobs, and 200 people are neither working nor looking for jobs. Taking the unemployment rate as the number of people not working and looking for jobs divided by the total number of people working or looking for jobs, what is the unemployment rate?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 5 per cent
Given:
Working = 760
Not working but looking for jobs = 40
Neither working nor looking for jobs = 200
Unemployment rate = people not working and looking for jobs ÷ people working or looking for jobs. The 200 who are not looking for jobs are left out.
Working or looking for jobs = 760 + 40 = 800
Unemployment rate = 40 ÷ 800 × 100 = 5 per cent
Option (1) 4 per cent — Incorrect. This divides 40 by all 1,000 people, counting those who are not looking for jobs.
Option (2) 5.3 per cent — Incorrect. This divides 40 by only the 760 working, leaving out the job seekers.
Option (3) 24 per cent — Incorrect. This counts the 200 who are not looking for jobs as unemployed (240 ÷ 1,000).
NCERT (2026-27): “1.1 Emergence of Macroeconomics … Demand for goods in the market was low, many factories were lying idle, workers were thrown out of jobs. In USA, from 1929 to 1933, unemployment rate rose from 3 per cent to 25 per cent (unemployment rate may be defined as the number of people who are not working and are looking for jobs divided by the total number of people who are working or looking for jobs). …” |