A hypothetical data shows that, in a year, of all the adult population, 20,500,000 were employed, 755,000 were unemployed, 45,000 were workers with part-time jobs looking for full-time jobs, 25,000 were discouraged workers and 8,500,000 were not in the labour force.

a)Use the above information and calculate the labour force participation rate and the unemployment rate.

b)Suppose that the natural rate of unemployment is 1.5 percent and the potential GDP is RM 850 billion, how much would be the actual GDP achieved in the above case?

c)Suppose that 2,500,000 students graduated from higher education institutions and begin to look for jobs. Ceteris paribus, determine the new unemployment rate if none of the students have found jobs yet. How this will change your answer in (b)?

d)Now suppose that 1,500,000 of the students whom graduated in (c) find jobs and the remaining are not yet employed. Ceteris paribus, determine the new unemployment rate. Clearly show your working for all calculations.

e)Simulate a scenario in which both employment and unemployment could both possibly increase.

(22 marks)