In July 2009, in the economy of Sandy Island, 10,000 people were employed, 1,000
ID: 1206091 • Letter: I
Question
In July 2009, in the economy of Sandy Island, 10,000 people were employed, 1,000 were unemployed, and 5,000 were not in the labor force. During August 2009, 80 people lost their jobs and didn’t look for new ones, 20 people quit their jobs and retired, 150 unemployed people were hired, 50 people quit the labor force, and 40 people entered the labor force to look for work.
a) Calculate the unemployment rate for July 2009.
b) Calculate the employment-to-population ratio for July 2009.
c) Calculate the number of people unemployed for the end of August 2009.
d) Calculate the number of people employed for the end of August 2009.
e) Calculate the unemployment rate for the end of August 2009.
Explanation / Answer
(a) Calculate the unemployment rate for July 2009.
The unemployment rate in July is 9.1 percent. The unemployment rate is the number unemployed as a percentage of the labor force. The number of unemployed workers is 1,000. The labor force is the number employed plus the number unemployed so in July it is 11,000.
The unemployment rate equals (1,000/11,000) x 100, which is 9.1 percent.
(b) The participation rate in July is 68.75 percent. The participation rate is the labor force as a percentage of the working-age population. The labor force is 11,000. The working-age population is the sum of the labor force and the number of people who are not in the labor force, which is 16,000. The participation rate is (11,000/16,000) x 100, which is 68.75 percent.
(c) Calculate the number of people unemployed at the end of August 2009.
The number of people who are unemployed at the end of August is 840. The number of people who are unemployed at the end of August equals the number unemployed in July plus the number of people who lost their job and who stayed in the labor market plus the number of people entering the labor market minus the number of people who were hired minus the number of people who left the labor market. So the number of people unemployed equals 1,000 + 40 - 150 - 50, which is 840.
(d). Calculate the number of people employed at the end of August 2009. The number of people who are employed at the end of August is 10,050. The number of people who are employed at the end of August equals the number employed in July minus job losers and job leavers plus hires and recalls
(e) Calculate the unemployment rate at the end of August 2009. The unemployment rate at the end of August is 7.7 percent. The unemployment rate equals the number unemployed expressed as a percentage of the labor force. The number of people who are unemployed is 840. The labor force equals the number employed plus the number unemployed and at the end of August it is 10,890. The unemployment rate at the end of August equals (840/10,890) x 100, which is 7.7 percent.
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