Which of the following is the correct way to calculate the unemployment rate? A (labor force unemployed) times 100 B (unemployed population) times 100 C. (unemployed labor force) times 100 D. (labor force population) times 100 A nation has a population of 260 million people. Of these 60 million are retired, in the military, institutionalized, or under 16 years old. There are million who are employed and 12 million who are unemployed. What is the unemployment rate? A. 9% B. 27% C.4% D. 6% Answer the next two questions on the basis of the following information about a hypothetical economy. Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer price index = 110 The unemployment rate is A. 16.7% B. 25% C. 18.8% D. 12 5%. If the members of the underground economy are presently counted as part of the unemployed when in fact they are employed, the official unemployment rate is overstated by about A. 5 percentage points. B. 6 percentage points. C. 0 percentage points. D. 2 percentage points.
Answer
1.
Unable to read question
2.
(D) Productivity shocks are the cause of most business
cycles
3.
Cyclical unemployment
(It occurs due to changes in business cycles)
4.
(Unemployed/LF)100
Where, LF = Employed + Unemployed
5.
Labor force = 260-60 = 200 M
Unemployed = 12 M
Unemployment rate = 12/200 = 6%
6.
Labor force = 80+25+15 = 120 M
Unemployed = 15 M
Unemployment rate = 15/120 = 12.5%
7.
New Labor force = 80+25+15+6 = 126 M
Unemployed = 15+6 = 21 M
Unemployment rate = 21/126 = 16.67%
When underground workers are actually employed:
New Labor force = 80+25+15+6 = 126 M
Unemployed = 15 M
Unemployment rate = 15/126 = 11.9%
Overstate in unemployment rate = 16.7% – 11.9% = 4.8%
Correct option: (a) 5 percent points
