Using the following information about the labor force of the economy to answer t

ID: 1192023 • Letter: U

Question

Using the following information about the labor force of the economy to answer the following questions

1, 500,000 college graduates decide to go to graduate school instead of looking for wor

100,000 out of work Santa Clauses in the summer

200,000 accountants lost their jobs because of no computerr skills

500,000 new college graduates looking for work

1,200,000 are employed

6. How many people can be catagorized as frictionally unemployed?

7. How many people can be categorized as structurally unemployed?

8. How many people can be catagorized as cyclically (or seasonally) unemployed?

9. How many people are in the labor force?

10. How many people are not in the labor force?

11. What is the unemployment rate?

12. What is the natural rate of unemployment?

(6) Frictionally unemployed are those who're looking for work = 500,000 (college graduates)

(7) Structurally unemployed are those who're jobless due to massive shift in technology and/or skills mismatch = 200,000 (accountants)

(8) Seasonally unemployed are those whose (lost) jobs are seasonal jobs = 100,000 (Santa Clauses)

(9) Total labor force = Employed + Unemployed (frictionally, structurally and seasonally)

= 1,200,000 + 500,000 + 200,000 + 100,000 = 2,000,000

(10) People who left labor force to join college are not in labor force = 1,500,000

(11) Unemployment rate = Unemployed / Total labor force = (500,000 + 200,000 + 100,000) / 2,000,000

= 40%

(12) Natural rate of unemployed = (Structural unemployed + Frictional unemployed) / Total labor force

= (200,000 + 500,000) / 2,000,000

= 35%

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