Suppose that a nation has a labor force of 100 people. In January, Amy, Barbara,

Question

Suppose that a nation has a labor force of 100 people. In January, Amy, Barbara, Carine, and Denise are unemployed; in February, those four find jobs, but Evan, Fancesco, George, and Horatio become unemployed. Suppose further that every month, the previous four who were unemployed find jobs and four different people become unemployed. Throughout the year, however, the same three people -- Ito, Jack, and Kelley -- continually remain unemployed because they lack sufficient skills to obtain open jobs. Bill, Bob, and Boop are not working and have given up finding work for the time being. a) What is the nation's frictional unemployment rate? b) What is the structural unemployment rate? c) What is the total unemployment rate? d) Describe Bill, Bob, and Boop. Are they unemployed? Explain.

Explanation / Answer

Frictional unemployment rate: 3/100 = 3%

Structural unemployment = 3/100 = 3%

Total unemployment rate = 6%

Bill, Bob, and Boop are strucally unemployed as they are not finidng jobs.

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