Canadian Securities Course (CSC) Level 1 Practice Exam

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What is the formula for unemployment rate?

( # of people not working but looking / labour force) x 100
( # of people working / total population) x 100
( # of people not working / labour force) x 100
( # of people looking for work / total population) x 100

The correct answer is: ( # of people not working / labour force) x 100

The unemployment rate is calculated to reflect the proportion of the labor force that is jobless and actively seeking employment. The correct formula identifies that the number of individuals not working but actively looking for work is divided by the total labor force, which consists of both the employed and the unemployed individuals. This method ensures that the measure captures those who are engaged in the job search, providing a clearer picture of labor market dynamics. The resulting figure is then multiplied by 100 to convert it into a percentage for easier interpretation. The other options do not accurately represent the unemployment rate: - The first option includes only those looking for work divided by the labor force, but does not differentiate between those actively seeking employment versus the entire labor force. - The second option calculates the employment rate instead, as it focuses on the number of people working relative to the total population. - The last option misrepresents the concept as it calculates the proportion of those looking for work against the total population rather than the labor force. Understanding the distinction of each term is vital for accurately assessing economic conditions.