The table below shows unemployment and labor force statistics for an economy. Actual rate of unemployment 3% Natural rate of unemployment 4% Population of the country 125 million Number of people employed 97 million Number of people unemployed 3 million Number of people employed part time 5 million Number of people discouraged workers 2 million Would the number of people employed part-time be included in labour force or not? Given the state of the economy described in the table, is actual real output less than, greater than, or equal to potential real output? Explain. Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent.
The table below shows unemployment and labor force statistics for an economy. Actual rate of unemployment 3% Natural rate of unemployment 4% Population of the country 125 million Number of people employed 97 million Number of people unemployed 3 million Number of people employed part time 5 million Number of people discouraged workers 2 million Would the number of people employed part-time be included in labour force or not? Given the state of the economy described in the table, is actual real output less than, greater than, or equal to potential real output? Explain. Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent.
Chapter6: Business Cycles And Unemployment
Section: Chapter Questions
Problem 7SQ
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Question
The table below shows
|
Actual rate of unemployment |
3% |
|
Natural rate of unemployment |
4% |
|
Population of the country |
125 million |
|
Number of people employed |
97 million |
|
Number of people unemployed |
3 million |
|
Number of people employed part time |
5 million |
|
Number of people discouraged workers |
2 million |
- Would the number of people employed part-time be included in labour force or not?
- Given the state of the economy described in the table, is actual real output less than, greater than, or equal to potential real output? Explain.
- Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent.
- Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same?
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