Question

The country of Econometrix has the following statistics.
 Population: 22.5 million
 Population under the age of 16 years: 7.5 million
 Discouraged workers: 200,000.
 Retired people: 1 million
 Structurally unemployed people: 200,000
 Frictionally unemployed people: 200,000
 Cyclically unemployed people: 2.2 million

Using only these statistics above, answer the following four parts. Show full calculations.

i. What is the labour force participation rate in economy X?
ii. What is the current total unemployment rate in economy X?
iii. What is the percentage of the adult labour force that is employed?
iv. In percentage terms, how much new unemployment occurred in economy X after it went into a recession?

Answer 1