Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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How is the rate of unemployment calculated?

(Total workforce) - (Number of unemployed) x 100%
(Number of unemployed) ÷ (Total workforce) x 100%
(Total workforce) ÷ (Number of employed) x 100%
(Number of unemployed) ÷ (Employed workers) x 100%

The correct answer is: (Number of unemployed) ÷ (Total workforce) x 100%

The calculation of the unemployment rate involves the ratio of the number of unemployed individuals to the total workforce, expressed as a percentage. This accurately reflects the proportion of people who are seeking work but are unable to find employment in relation to the overall labor force. By dividing the number of unemployed by the total workforce and multiplying by 100, you obtain the unemployment rate, which is a key indicator of the labor market's health. In contrast, other options do not provide a correct or meaningful measure of unemployment. For instance, subtracting the number of unemployed from the total workforce doesn't yield a rate but rather gives the number of employed individuals. The option that divides the total workforce by the number of employed workers would indicate the dependency ratio, not the unemployment rate. Lastly, dividing the number of unemployed by the employed workers does not give a representative measure of unemployment since it focuses only on those already employed instead of the broader labor force context.