The following table shows labour market statistics for Albania and Argentina in 2019. All figures are number of persons, thousands. Albania Argentina Population 2846 44490 Population of working age 2368 22349 Labour force 1435 13432 Out of labour force (inactive) 933 8917 Employed 1275 12237 Unemployed 160 1195

a. Calculate the participation rate, employment rate and unemployment rate for Albania and Argentina in 2019. Show your workings. (3 marks)

b. Discuss which country (Albania or Argentina) has the stronger (i.e. best performing) labour market. Justify your answer. [max words: 150] (3 marks)

c. The onset of COVID-19 has seen aggregate demand in Argentina decrease dramatically. As a result, unemployment in the country has increased. Draw a model of the labour market. Assume that before the onset of COVID-19 the labour market in Argentina was in equilibrium. On your model show what effect the increase in unemployment in the country would have on the real wage in the short term before any adjustments take place. Label both axes, curves, and important points on your model. (5 marks)

d. If an economy has low aggregate demand with high unemployment, then an automatic adjustment back to equilibrium could occur through a process of wage and price cuts in the labour market. Imagine that you are a worker in Argentina who has recently lost their job because of COVID-19 and you see many other workers in your country have also lost their jobs. How might this affect any adjustment back to equilibrium in the labour market? [max words: 250] (4 marks)

Albania Argentina Population 2846 44490 Population of working age 2368 22349 Labour force 1435 13432 Out of labour force (inactive) 933 8917 Employed 1275 12237 Unemployed 160 1195