Q8

Question 8: Unemployment and Inflation (1 (a) Consider the below employment table for a small economy (figures are in millions) and calculate the size of the labour force, the labour force participation rate, and the unemployment rate. Population Number Number Employed Unemployed 50 2 (b) The relation between the unemployment rate and the inflation rate is given by: If & what is the current unemployment rate? (c) 1 If inflation expectations in (b) decrease: calculate the new rate of unemployment