Question

a). supposed during a year working-age population increased by 1%, labor force participation decreased by -3%, and the number of unemployed people increased by 4%. (note these numbers are rates of growth of the corresponding variables). by how much did the unemployment rate increase or decrease? b). why is there unemployment in an economy at all?

Answer 1

Unemployment rate increased by 4%.

There is unemployment in an economy because of many reasons, it can be the case that there are structural changes in an economy, therefore, labor participation decreased and increase in the unemployed people.

There can be the case that new technology is introduced because of this less labor is neede in an economoy, as a result unemployed workforce increases,.

There are many causes of unemployment in the economy: high interest rates, recession, financial crisis, structural changes , technological changes etc.