Question

StatsCan reported the following data for January 2001:

a. Calculate the Unemployment Rate (Show your work). (2)

b. Calculate the Labour Force Participation Rate (Show your work) (2)

c. Briefly explain why 0% unemployment is bad for an economy. (2)

Answer 1

A) Unemployed means those who are out of work and who are actively looking for a job . unemployment is calculated by dividing the number of unemployed people by the Total number in the labour force then multiplying by 100.

For example :

Total adult population= 290 million

Labour force = 159 million

Employed= 151 million

In this example unemployed = labour force-employed

= 159-151 = 8 million

Unemployment rate = (unemployed÷ labour force)× 100

= (8÷ 159)× 100

= 5.03%

B) calculation of labour force participation rate

=( Labour force÷ total adult population)× 100

=( 159÷ 290)× 100

= 54.83%

C) A zero percent jobless rate could kick up inflationary pressure

High unemployment rate would mean demand for labor force is less relative to the supply.this in turn has the potential to depress wages as people would be willing to be hired at lower wages.alternatively when jobless rate is low there are enough jobs available then the availability of labour force