1. A. Assume that the total population is 200, the size of the labor force is...

1. A. Assume that the total population is 200, the size of the labor force is 100, the amount of people employed is 90, and the amount of people unemployed is 10. Calculate the unemployment rate?

B. In general, approximately what is the lowest unemployment rate that can reasonably expected and why?

Solutions

Expert Solution

1. A) Unemployment rate = (Unemployed / Labor force) * 100

= (10 / 100) * 100

= 10%

B) In general, approximately the lowest unemployment rate that can reasonably expected is 3.5% to 4.5%. Because the natural rate of unemployment is the minimum unemployment rate. The natural rate of unemployment is the rate of unemployment when the labour market is in equilibrium. The natural rate of unemployment is the combination of frictional, structural, and surplus unemployment that occurs even in a healthy economy.

Rahul Sunny answered 1 week ago

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