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Question 1:
The government of Blefuscu announces that the unemployment rate fell from 2005 to 2006. The government says this is positive news as it shows more jobs are being created and less people are unemployed. The labor unions, on the other hand, disagreed with this assessment and stated that they could find no evidence that additional jobs have been created between 2005 and 2006.
Your task is to explain how the unemployment rate can fall even if there are no new jobs being created. First, using the numbers you have been given in 1A as the 2005 figures, fill in the table below by developing a set of numbers that show how the unemployment rate can fall even if there are no new jobs being created. Assume no change between 2005 and 2006 in the population, percentage of part time workers and working age population. Second, discuss in detail how the numbers show the unemployment rate can fall even if there are no new jobs being created. List two possible reasons why this may occur.
Year
2005
2006
Population
850,000
Working age population
400,000
Number of people Not in the labour force
50,500
______
Part-time employment as a percentage of total employment
15%
___%
Number of full-time employees
201,451
_____
Rate of underemployment
2%
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