Answer to Question #135867 in Economics of Enterprise for Hadgu

Question

26. Consider the following information for a particular economy.
Total population = 100 million Number of employed = 15 million
Total labor force = 45 million Natural rates of unemployment = 10%

a. Find the total unemployment rate
b. Calculate the cyclical unemployment rate

Answer 1

a. calculation of unemployment rate:-

total labor force=number of people employed+number of people unemployed

then Number Of People unemployed=total labor force-number of people employed

number of people unemployed=45-15

number of people unemployed=30 million

unemployment Rate=(number of people unemployed/total labor force )x100

= (30/45)x 100

=66.666

then unemployment rate is 66.666%

b. Calculation of cyclical unemployment rate

cyclical unemployment rate=current unemployment rate-normal unemployment rate

cyclical unemployment rate=66.67%-10%

cyclical unemployment rate=56.67%