In Year 1, an economy has 900 people working, 100 people not working but looking for jobs, and 200 students who are neither working nor looking for jobs. In Year 2, 50 of these students start looking for jobs, and 20 of them find jobs. Nothing else changes. Using the definition of the unemployment rate given in NCERT, the unemployment rate in Year 2 is about:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 12.4 per cent
Given:
Year 1: working = 900; not working but looking for jobs = 100; students not looking for jobs = 200
Year 2: 50 students start looking for jobs, and 20 of them find jobs
The unemployment rate = people not working and looking for jobs ÷ people working or looking for jobs. People not looking for jobs are left out.
Working in Year 2 = 900 + 20 = 920
Looking for jobs but not working = 100 + (50 − 20) = 130
Working or looking for jobs = 920 + 130 = 1,050
Unemployment rate = 130 ÷ 1,050 × 100 = about 12.4 per cent
Option (1) 9.5 per cent — keeps the old 100 unemployed over 1,050.
Option (2) 10.8 per cent — divides 130 by all 1,200 people, students included.
Option (3) 14.1 per cent — divides 130 by only the 920 working.
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). Over the same period aggregate output in USA fell by about 33 per cent. …” |