Question

Suppose the town of Boone has a total population of 70,000 people. Of those, 65,000 people are employed. There are 1,000 full-time students who are not employed or actively seeking work. The rest of the people are out of work but have been actively seeking work within the past four weeks.

Instructions: In part a, round your answer to 1 decimal place. In part b, enter your answer as a whole number.

a. What is Boone’s unemployment rate?

      percent

b. Suppose there are 1,000 people who are unemployed as a result of frictional unemployment and 2,000 people who are unemployed as a result of cyclical unemployment. How many people are unemployed as a result of structural unemployment?

     

Answer 1

Solution:-

(1).Labor force = Total population - Full-time students

Labor force = 70,000 - 1,000

Labor force = 69,000

Number of unemployed = Labor force - Number of employed

Number of unemployed = 69,000 – 65,000

Number of unemployed = 4,000

Calculate the unemployment rate -

Unemployment rate = (Number of unemployed/Labor force) * 100

Unemployment rate = (4,000 / 69,000) * 100 = 5.797% or 5.8%

Boone's unemployment rate is 5.8 percent.

(2). Total Unemployed = 4000

Frictional unemployment = 1000

cyclical unemployment = 2000

Total Unemployed = Frictional + cyclical + Structural

Structural Unemployment = 4000 – 1000 - 2000 = 1000