Gce Model Questions Vol1 2022 Economics Question 10

Practice essay / theory question 10 from the 2022 Gce Model Questions Vol1 Economics examination. This question covers Unemployment, Labour market, Okun’s law, Macroeconomic policy .

Gce Model Questions Vol1 2022 Economics Essay / Theory

Topics: Unemployment Labour market Okun’s law Macroeconomic policy

Question 10 GCE_MODEL_QUESTIONS_VOL1 • 2022 • ECONOMICS • essay

Country Y’s labour‑market statistics for the most recent year are as follows: (i) Labour force = 12 million (ii) Unemployed = 1.2 million (iii) Under‑employment (people working part‑time but wanting full‑time) = 0.8 million (iv) Structural unemployment is estimated to be 0.5 million (v) The economy is operating at 85 % of its potential output Answer the questions below.

Question Parts

( a )

Compute the official unemployment rate and the under‑employment rate as percentages of the labour force.

( b )

Explain the difference between cyclical and structural unemployment and estimate the proportion of total unemployment that is cyclical in this economy.

( c )

Using Okun’s law (ΔY/Y = –2 Δu), where Δu is the change in the unemployment rate relative to the natural rate, estimate the output gap as a percentage of potential output.

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About This Question

This is Gce Model Questions Vol1 2022 Economics Question 10. It is one of the essay questions from the 2022 Gce Model Questions Vol1 Economics examination.

The question covers Unemployment, Labour market, Okun’s law, Macroeconomic policy .

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