The city of Hope has a labor force of 1000. Twenty people lose their jobs each month and remain unemployed for exactly one month before finding jobs. On January 1, May 1, and September 1 of each year, 50 people lose their jobs for a period of four months before finding new jobs.

What is the unemployment rate in any given month?

A).2%

B).5%

C).7%

D). 3%

The correct answer is C. The unemployment rate in any given month is of 7%.

Explanation:

In the city of Hope every month 20 people are unemployed, getting a new job within a month. Because of this, every month we have at least 20 unemployed.

But also, every 4 months (January 1, May 1 and September 1), 50 people lose their jobs and it takes 4 months to get another. In other words, those 20 unemployed are joined by 50 more, totaling 70 unemployed people who will be getting new jobs in different periods of time. Thus, in February there will be 20 people who lost their jobs in that month, plus 50 who lost it in January and will get a new one in May.

Therefore, every month there will be 70 unemployed people, out of a total active population of 1,000 people, that is, 7% of the active population.