Question

2.1. Suppose there are 180 million employed people and 20 million unemployed people.

a) What is the unemployment rate? (5 marks)

b) Suppose that 5 million unemployed people give up their search for jobs and become discouraged workers. What is the new official unemployment rate?

Answer 1

unemployment rate=unemployed/total labour force multiplied by one hundred percent

(a) 20/200*100%=10%

(b)15/200*100%=7.5%