Question

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

1. Calculate the size of the labor force.

2. Calculate the labor force participation rate. Show your work.

3. 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.

4. Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. Show your work.

5. Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same?

   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

6. Calculate the size of the labor force.
8. Calculate the labor force participation rate. Show your work.
10. 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.
12. Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. Show your work.
14. Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same?

    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

15. Calculate the size of the labor force.
17. Calculate the labor force participation rate. Show your work.
19. 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.
21. Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. Show your work.
23. Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same?

    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

24. Calculate the size of the labor force.
26. Calculate the labor force participation rate. Show your work.
28. 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.
30. Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. Show your work.
32. Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same?

Answer 1

a) Size of labour force = 97 + 3 + 5 = 105 million

b) Labour force participation = 84%

employed+ unemployed / adult population×100 = 105 / 125× 100 = 84 %

Note= discouraged workers are not calculated in labor force.

c) Actual real output is greater than potential output because actual rate of unemployment is less than natural rate of unemployment.

d) when actual unemployment rate increase by 5% it means new actual unemployment rate = 8% so cyclical unemployment = actual rate unemployment - natural rate of unemployment = 8 - 4 = 4%

So cyclical unemployment rate = 4 %

e) If discouraged worker find employment, the actual rate of unemployment is Increases because discourage workers consider to be unemployed workers