Use the following information about Employment Country to answer the following q
ID: 1161284 • Letter: U
Question
Use the following information about Employment Country to answer the following questions. Numbers are in millions.
What is the labour force in 2013 and 2014?
What is the growth rate of labour force between 2013 and 2014?
What is the unemployment rate in 2013 and 2014?
From 2013 to 2014, the adult population went up while the labour force went down. Provide a number of explanations why this might have occurred.
If the natural rate of unemployment (equilibrium unemployment) in Employment Country is 6.6 percent, what is the maximum that cyclical unemployment could be in 2013 and 2014? Is Employment Country likely to be experiencing a recession in either of these years? (Hint: compare the equilibrium unemployment with the levels of unemployment you found in question 3. for 2013 and 2014)
2013 2014 Population 223.6 226.5 Adult population 168.2 169.5 Number of unemploymed 7.4 8.1 Number of employmed 105.2 104.2Explanation / Answer
(a) Labor force = Number of unemployed + Number of employed
Labor force in 2013 = 7.4 + 105.2 = 112.6 million
Labor force in 2014 = 8.1 + 104.2 = 112.3 million
(b) Growth rate of labor force between 2013 and 2014 =[ (112.3 - 112.6) 112.6 ] 100
= (- 0.3 million/ 112,6 million ) 100
=( - 0.0027) 100
= - 0.27%
(c) Unemployment rate in 2013 = (7.4 / 112.6 ) 100 = 6.6%.
Unemployment rate in 2014 = (8.1/ 112.3) 100 = 7.2 %
(d) From 2013 to 2014 , the adult population went up from 168.2 million to 169.5 million while the labor force went down from 112.6 million to 112.3 million. This can be because of earlier retirements , students staying in college longer ,discouraged workers discontinuing their job search , more parents staying at home with children.
(e) If the natural rate of unemployment is 6.6% .
Cyclical unemployment in 2013= 6.6% - 6.6% = 0%.
Cyclical unemployment in 2014 = 7.2% - 6.6% = 0.6%.
In 2013 ,unemployment is normal for ' employment country' . Hence, there is no recession.
in 2014 , unemployment is above normal (i.e positive cyclical unemployment ) . Hence, there may be recession in unemployment country.
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