Question

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In August 2009, the population of a small economy, Amia was 578 million. (Assume that the population was stagnant for several months until December 2009). There were 533.4 million people in the labor force and 26.7 of them were considered unemployed. In September 2009, due to the usage of automation in several manufacturing companies, 0.7 million people were laid off. Out of these people, 0.1 million decided to retire and some decided not to look for job anymore.

Based on the given information, answer the following questions. Show the formula and your workings.

1. The unemployment rate in August 2009.        
2. The number of people employed in August 2009.       (1 mark)
3. Labor force participation rate in August 2009.
4. The number of people employed in September 2009. (1 mark)
5. The number of people unemployed in September 2009.         (1 mark)
6. The unemployment rate in September 2009. Write your answer in two decimal places.
7. What type of unemployment occurred in Amia?         (1 mark)
8. Which term refers to those who gave up and decided not to look for job anymore?

(1 mark)

cost-push inflation, demand-pull inflation.

	Situation	Cause of inflation
a)	Prices for Apple products, including the iPod, iPad, and iPhone are higher than comparable products. That's because the consumer feels Apple understands their needs, including emotional ones. There is a certain cachet to owning an Apple product, and that allows Apple to charge higher prices. (1 mark)
b)	The Organization of Petroleum Exporting Countries (OPEC) controls 80 percent of the world's oil reserves. When OPEC restricted oil in 1973, it quadrupled prices. (1 mark)
c)	On March 11, 2011, a 9.0 magnitude earthquake and 100-foot high tsunami pummeled Japan's northeastern shoreline. It disrupted the supply of auto parts which resulted in higher prices. (1 mark)
d)	There is over-expansion of the money supply in which too much money chasing too few goods. This typically occurs when the government prints too much money. It usually does this to pay off its debt. (1 mark)

Answer 1

Answer (a) : Unemployment rate in August 2009 =

total labor force = 533.4 million

number of unemployed = 26.7 million

Therefore , the percentage of unemployed = 26.7 x 100 / 533.4

= 5

i.e the rate of unemployment in August 2009 is 5% .

Answer (b) The number of people employed in August 2009 is = Total labor force population - Total unemployed

= 533.4 million - 26.7 million

= 506.7 million.

Answer (c) Labor force participation rate in August 2009 = 533.4 - (26.7 million out of 533.4 million)

= 533.4 being taken as 100% , then > 100- 5%

= 95%.

Answer (d) The number of people employed in September 2009 = (533.4- 26.7) million - 0.7 million

= 506.7 - 0.7 million

= 506 million

Answer (e) The number of people unemployed in September 2009 =Total population - Total employed

= 578 million - 506 million

= 72 million.

Answer (f) Unemployment rate in September 2009 =

total labor force = 533.4 million

number of unemployed = 26.7 million

Therefore , the percentage of unemployed = 27.4 x 100 / 533.4

= 5.13

i.e the rate of unemployment in August 2009 is 5.13 % .

Answer (g) The nature of unemployment that occurred in Amia was recession, i.e. unemployment due to technological advancement or development. This is a common trend in the modern economies.

Answer (h) The people who themselves decided to not look for any more jobs or decided to give up the current job is referred by voluntary unemployed. They have voluntarily decided to be unemployed.