Answer to Question #286692 in Macroeconomics for Msb

Question

1) Calculate the natural level of employment if the labor force is 150 million and the 

natural rate of unemployment is 5%.

Answer 1

Natural rate of employment$=\frac {Employed}{Labor Force}$

$Natural rate of unemployment=\frac {Unemployed}{Labor Force} ​$

$5 =\frac {U}{150m}\times100 ​$

Where; U= Unemployed

$100U=5\times150m$

$U=\frac{(5\times 150m)}{100}=7.5m$

Employed = Labor force-Unemployed= 150-7.5= 142.5m

$Natural rate of employment=\frac {142.5m}{150m}\times 100= 95$%