Question

Macroeconomic data for the country of XYZ for the years 2014 and 2015 are given as

	2014	2015
Output	12,000 tons of carrots	20,000 tons of carrots
Unemployed	100 workers	50 workers
Unemployment rate	5%	2%
Population	4000 people	4400 people

Assume that XYZ produces only carrots.

What is the difference in labour force between 2014 and 2015?

	a) 250 workers
	b) 400 workers
	c) 500 workers
	d) None of the above

Answer 1

Answer is “500”

2014

Unemployment rate = 5 % of labor force

Where labour force = employed + unemployed

If population is 4000, its 5 % is 200, but unemployed is 100, so labor force will be 2000 (half)

2015

Unemployment rate = 2 % of labor force

Where labor force = employed + unemployed

If population is 4400, its 2% is 88, but unemployed is 50, so labor force will be 2500 (2500 * 2/100 = 50 unemployed)