Chapter 26 worked problems

Chapter 26 worked problems - C hapter 26 worked problems...

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Chapter 26 worked problems Unemployment 1. How many people are in the labor force? Answer: 102. Count the unemployed and employed numbers, but not the discouraged workers. 2. What is the unemployment rate from the above table? Answer: 6.9%. After we found what the labor force was, we simply need to divide the unemployed number by the labor force: 7 / 102 = 6.9% 3. If the natural rate of unemployment is 5% in the above table, what can be said about the unemployment rate? Answer: About 2% is due to cyclical changes. The natural rate of unemployment is frictional + structural unemployment. This means, that the economy is contracting, or going through a recession, which means the economy is experiencing business cycle (cyclical) unemployment.
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4. Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, the official unemployment rate would: Answer: Decline.
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