Question

Hovana has a labor force of 150 million people, 15 million of whom are currently frictionally unemployed and another 5 million of whom are currently structurally unemployed.

The natural rate of unemployment is __________%

Answer 1

The natural rate of unemployment is the sum of frictional and structural unemployment and can be calculated by dividing the sum of these unemployment types by the labor force.

Step-by-step explanation:

The natural rate of unemployment is the sum of frictional and structural unemployment. In this case, frictional unemployment is 15 million people and structural unemployment is 5 million people. To calculate the natural rate of unemployment, divide the sum of frictional and structural unemployment by the labor force and multiply by 100.

Natural rate of unemployment = (Frictional unemployment + Structural unemployment) / Labor force * 100

Natural rate of unemployment = (15 million + 5 million) / 150 million * 100 = 13.33%.