QUESTION 48 (4 marks)
An economy has 950 000 employed people and 50 000 unemployed people. Then 20 000 previously inactive people begin actively looking for work; none finds a job immediately. Calculate the unemployment rate before and after, and explain why this change need not signal job destruction.
Practice marking scheme
Answer
5.00% before; approximately 6.86% after; employment is unchanged.
Working
Initial labour force = 1 000 000 and u = 50 000/1 000 000 = 5%. The new labour force is 1 020 000 with 70 000 unemployed, giving u = 6.8627%. Entry increases labour supply and measured unemployment without reducing the 950 000 employed people. A fuller assessment would examine vacancies and future absorption of new entrants.
Marking criteria
- Calculates the two rates with the correct denominators. [2 marks]
- Identifies unchanged employment. [1 mark]
- Explains increased labour-force entry. [1 mark]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabusCompare your working with the guide above.