IAI Actuarial Core Principles · Business Economics · Business activity, unemployment and inflation
In a district, the working-age population is 50,000. Of these, 30,000 are employed and 3,000 are actively seeking work. The remainder are students, homemakers and discouraged workers who have stopped searching. What are the labour force participation rate and the unemployment rate respectively?
The participation rate is 66% and the unemployment rate is about 9.1%. The labour force is 33,000 (employed plus job-seekers), which is 66% of the 50,000 working-age population, and 3,000 unemployed is 9.1% of that labour force.
- A66% and 10%
- B60% and 10%
- C66% and 9.1%Correct
- D60% and 9.1%
- 66% and 6%
Explanation
Labour force = 30,000 + 3,000 = 33,000. Participation = 33,000/50,000 = 66%. Unemployment rate = 3,000/33,000 = 9.09%. Dividing by employment gives 10%, which uses the wrong base, and 60% ignores the unemployed in the labour force.
Did you get it right without looking?
One question tells you little. A timed set on Business activity, unemployment and inflation shows your real accuracy, how long you take and where you lose marks.
More Business activity, unemployment and inflation questions
- Money supply grows by 10% a year, real output grows by 3% a year, and velocity of circulation is constant. Using the quantity theory of mone…
- In a standard aggregate demand and aggregate supply diagram, which of the following would cause a movement along the aggregate demand curve …
- In the early 2000s, many Indian bank branches replaced manual ledger clerks with core banking software, leaving some clerks without jobs unt…
- A manufacturing firm sells durable goods whose demand rises by a larger percentage than national income in booms and falls by a larger perce…
- Which of the following is generally regarded as a cost of unexpected inflation for an economy?
- Which development is most likely to shift an economy's short-run Phillips curve to the right (a worse trade-off) in an economy like India's?