Question

In a country with a labour force of 200, a different group of 10 people becomes unemployed each month but becomes employed once again a month later. No others outside these groups are unemployed.

a. What is this country's unemployment rate?

b. What is the average duration of unemployment?

c. Suppose that establishment of a system of unemployment compensation increases to two months the interval that it takes each group of job losers to become employed each month. Nevertheless, a different group of 10 people still becomes unemployed each month. Now, what is the average duration of unemployment?

d. Following the change discussed in part (c), what is the country's unemployment rate?

Short answer

a. country's unemployment rate is$5\%$

b. average duration of unemployment is one month

c. average duration of unemployment is two months

d. the country's unemployment rate is$10\%$

Step-by-step solution

introduction

The unemployment rate is the number of jobless individuals isolated by the complete number of individuals in the general workforce. The term unemployment implies the timeframe during which an individual is jobless and has been consistently searching for work.

explanation part (a)

Calculating the unemployment rate = $\frac{\text{numberof peopleunemployed}}{\text{Total Population}}\times 100$

$\Rightarrow \frac{10}{200}\times 100=5\%$

part (b)

Since a different group of people becomes unemployed each month but becomes employed once again a month later hence the average duration of unemployment is one month.

part (c)

The establishment of a system of unemployment compensation increases to two months the interval that it takes each group of job losers to become employed each month. Nevertheless, a different group of people still becomes unemployed each month hence the average duration of unemployment is two months.

part (d)

Following the change discussed in part (c), the country's unemployment rate is

$$\begin{gathered} \Rightarrow \frac{20}{200}\times 200 \\ =10\% \end{gathered}$$