How is the unemployment rate defined?

The unemployment rate is defined as the percentage of the labor force that is unemployed and actively seeking employment. This definition is central to understanding how economists assess the health of the labor market. The labor force consists of individuals who are either employed or actively looking for work. In practice, to calculate the unemployment rate, the number of unemployed individuals—those not currently working but available for work and who have actively sought employment in a recent period—is divided by the total labor force and then multiplied by 100 to get a percentage.

This concept highlights the dynamic nature of the workforce, as it encompasses only those who are engaged with the job market and excludes individuals who are not looking for work, such as retirees or those who have chosen not to participate in the job market for various reasons. Thus, option B captures the essence of the unemployment rate accurately.