The table below shows unemployment and labor force statistics for an economy: Actual rate of unemployment 3% Natural rate of unemployment 4% Population of the country 125 million Number of people employed 97 million Number of people unemployed 3 million Number of people employed part time 5 million Number of people discouraged workers 2 million
Calculate the size of the labor force Calculate the labor force participation rate. Show your work: 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: Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent: Show your work: Suppose discouraged workers reenter the labor force and find employment: Will the actual rate of unemployment increase, decrease, or stay the same?