In the economy of Macroland 625 percent of the population is

In the economy of Macroland 62.5 percent of the population is employed, while the unemployment rate is 6.0 percent.

Labor Force Participation Rate =

Solution

Labor Force Participation Rate measures the proportion of population which forms the labor force. Here we have the information that 62.5 percent of the population is employed. Let the population be 200. Then we have total number if employed = 62.5% x 200 = 125. If the unemployment rate is 6.0 percent, we have the required formula

6% = Unemployed/labor force

6% = Unemployed / (Employed + Unemployed)

6% = Unemployed / (125 + Unemployed)

7.5 = 0.94 x unemployed

Total unemployed is 7.97. Now labor force = 7.97 + 125 = 133 (approx). Hence Labor Force Participation Rate = Labor force / Population = 133/200 = 66.5%.