Suppose the town of Boone has a total population of 60,000 people. Of those, 56,

Question

Suppose the town of Boone has a total population of 60,000 people. Of those, 56,000 people are employed. There are 2,000 full-time students who are not employed or actively seeking work. The rest of the people are out of work but have been actively seeking work within the past four weeks. Instructions: In part a, round your answer to 1 decimal place. In part b, enter your answer as a whole number a. What is Boone's unemployment rate? percent b. Suppose there are 500 people who are unemployed as a result of structural unemployment and 1,000 people who are unemployed as a result of cyclical unemployment How many people are unemployed as a result of frictional unemployment?

Explanation / Answer

(a)

Number unemployed = Population - Number employed - Full time students = 60,000 - 56,000 - 2,000 = 2,000

Labor force = Number unemployed + Number employed = 2,000 + 56,000 = 58,000

Unemployment rate = Number unemployed / Labor force = 2,000 / 58,000 = 0.034 = 3.4%

(b)

Frictionally unemployed = Number unemployed - Structurally unemployed - Cyclically unemployed

= 2,000 - 500 - 1,000

= 500

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