Question

If the number of employed (E) and the number of unemployed (U) each increase by 10,000 people, what happens to the unemployment rate? Why?

Answer 1

$u=\frac{U}{L}=\frac{U}{E+U}$

initially:

U=5000

E=10000

$u=\frac{U}{L}=\frac{U}{E+U}=\frac{5000}{5000+10000}=0.33$

U=15000

E=20000

$u=\frac{U}{L}=\frac{U}{E+U}=\frac{10000}{10000+20000}=0.33$

according to the formula will not change