How is the unemployment rate calculated?

The unemployment rate is a key economic indicator that reflects the percentage of the labor force that is unemployed but actively seeking employment. It is calculated using the formula where the number of unemployed individuals is divided by the total labor force, and the result is then multiplied by 100 to express it as a percentage. This measurement helps economists and policymakers gauge the health of the labor market and the overall economy.

In this calculation, the labor force consists of both employed and unemployed individuals who are actively looking for work. By focusing on the labor force rather than the entire working-age population, the unemployment rate specifically measures those who are participating in the labor market. This makes the correct option the most accurate representation of how the unemployment rate is derived.