If 120 people are in the labour force and 18 are unemployed, what is the unemployment rate?

• A. 10%
• B. 8%
• C. 20%
• D. 15%

Answer: (D)

The unemployment rate is the share of people in the labour force who are unemployed and actively seeking work. Here, there are 18 unemployed people out of 120 in the labour force, so the rate is 18 divided by 120, multiplied by 100. 18/120 = 0.15, and 0.15 × 100 = 15%. So the unemployment rate is 15%. Remember the labour force includes both those who are employed and those who are unemployed, not the total population.