(d) Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. Show your work. (e) Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same?

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Chapter1: Making Economics Decisions
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The table below shows unemployment and labor force statistics for an economy.
Actual rate of unemployment
Natural rate of unemployment
Civilian, noninstitutional population age 16 and over
Number of people employed full time
Number of people employed part time
Number of people unemployed
Number of discouraged workers
3%
4%
125 million
92 million
5 million
3 million
2 million
(a) Calculate the size of the labor force. Show your work.
(b) Calculate the labor force participation rate. Show your work.
(c) Given the state of the economy described in the table, is actual real output less than, greater than, or
equal to potential real output? Explain.
(d) Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased
to 5 percent. Show your work.
(e) Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of
unemployment increase, decrease, or stay the same?
Transcribed Image Text:The table below shows unemployment and labor force statistics for an economy. Actual rate of unemployment Natural rate of unemployment Civilian, noninstitutional population age 16 and over Number of people employed full time Number of people employed part time Number of people unemployed Number of discouraged workers 3% 4% 125 million 92 million 5 million 3 million 2 million (a) Calculate the size of the labor force. Show your work. (b) Calculate the labor force participation rate. Show your work. (c) Given the state of the economy described in the table, is actual real output less than, greater than, or equal to potential real output? Explain. (d) Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. Show your work. (e) Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same?
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