answerstohomework3spring2008 - Economics 102 Spring 2008...

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Economics 102 Spring 2008 Answers to Homework #3 Due March 31, 2008 On your homework please include at the top of the first page your name, TA name, and the section number for the discussion section you attend. All homeworks should be legible and neat: do a professional looking job! Question 1. Unemployment. In 2007, there were 2,500,000 adults in China. 1,800,000 of the adults were employed; 500,000 were unemployed; 100,000 were discouraged workers; and 100,000 were not working or seeking jobs in 2007. Among the unemployed, 390,000 were engaged in job search, and 100,000 were in the labor markets where the number of people seeking jobs is more than the number of jobs available. a. What are the labor force and unemployment rates in 2007? Labor force = Employed + Unemployed = 1,800,000 + 500,000 = 2,300,000. Unemployment rate = (Unemployed/Labor force) 100% = (500,000/2,300,000)100% = 21.74% b. What is the frictional, structural, and cyclical unemployment in 2007? What is the natural rate of unemployment in 2007? Frictional unemployment = 390,000 Structural unemployment = 100,000 Natural unemployment = Frictional unemployment + Structural unemployment = 490,000 Cyclical unemployment = Actual unemployment – Natural unemployment = 10,000 Natural rate of unemployment = (Natural unemployment / Labor force) 100% = 21.30% 1
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c. Which of the following diagrams is more appropriate to describe labor markets
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answerstohomework3spring2008 - Economics 102 Spring 2008...

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