In the latest labour market survey for the country of Examinia:

12,000 people reported working for at least 1 hour in the previous week in paid employment, but among these 12,000 people, only 10,000 reported themselves to be in full-time employment.

3,000 people reported that they have not worked for pay, are looking for employment and are available to start immediately.

An additional 1,000 people reported that they have not worked for pay, are looking through job advertisements and will be available to start work 2 months later.

The working age population in the country is 20,000.

(a) Calculate the unemployment rate in the country of Examinia.

(b) 2,000 of the unemployed persons reported that they were unemployed because they are in the process of searching for a job that best fits their skills, interests and expectations of renumeration. 1,000 of the remaining unemployed persons said that they were unemployed because they lack the skills required by employers in the modern economy. Calculate the following:

- Rate of frictional unemployment. (Number of frictionally unemployed divided by the labor force.)

- Rate of structural unemployment. (Number of structurally unemployed divided by the labor force.)

- Rate of cyclical unemployment.

- The natural rate of unemployment.

(4 marks)

(c) Given your answer to part (b), is the economy of Examinia in an economic boom, contraction or at full employment? Briefly explain your answer in a sentence or two.

(d) As a result of the COVID-19 pandemic, the economy started to tip into a recession after the labor market survey cited above was conducted. This resulted in 500 previously employed persons becoming unemployed. Furthermore, the recession has caused 1000 of the unemployed workers to stop looking for work. Will the unemployment rate increase or decrease as a result of these developments. Carefully explain your answer.

(e) Should the government of Examinia engage in expansionary or contractionary fiscal policy in response to the recession? State 2 specific discretionary fiscal policies that the government can take to counteract the effect of the recession.