Standard Formulae to Calculate the Unemployment Rate 
Ans:
1(a)
Unemployment Rate =
Unemployed
Employed + Unemployed
In January 2012, 141,608 thousand were employed and 12,748 thousand were unemployed. Unemployment rate = 12,748 ÷ (141,608 + 12,748) = 8.26%
In January 2013, 143,322 thousand were employed and 12,332 thousand were unemployed. Unemployment rate = 12,322 ÷ (143,322+12,332) = 7.92%
1(b)
Employment-Population ratio =
In January 2012, 141,608 thousand were employed and total population was 244,663 tnousand. Employment-Population ratio = 141,608 ÷ (141,608 + 242,269) = 36.89%
In January 2013, 143,322 thousand were employed and total population was 242,269 tnousand. Employment-Population ratio = 143,322 ÷ (143,322 + 242,269) = 36.94%
1(c)
The change in unemployment rate from January 2012 to January 2013 is decrease from 8.26% to 7.92%.
So change is (7.92-8.26)/8.26 = -4.07%
Ans:
Let us assume that U denotes Natural rate of unemployment,
S denotes Separation rate
F denotes Finding rate
L denotes Labour Force
In steady state equilibrium equilibrium, flows into unemployment unemployment ( separations ) (“separations”) equal flows from unemployment (“finds”) – use “bathtub theorem”
So we can show in equilibrium, unemployment rate is
Hence, natural Rate of Unemployment for 2014 is as follows:
(U/130) = (0.02 + {0.02+0.20}) = 11.82%
Similarly, natural Rate of Unemployment for 2015 is as follows:
(U/100) = (0.025 + {0.025+0.15}) = 14.29%
Ans: Removing labour restrictions will give freedom to companies to fire staff that is disguised unemployed, hence reducing the rate of disguised unemployment.
In addition, whenever needed these vacancies can be filled with the person who is willing to work.
Hence, there will be overall reduction in unemployment rate.
At the same time, demand for employees will increase because companies can replace low quality employees with high quality employees on the other hand supply remaining constant and hence, wages will increase as per demand and supply rule.
Ans:
Year
CPI
Price
1(a)
Unemployment Rate =
Unemployed
Employed + Unemployed
In January 2012, 141,608 thousand were employed and 12,748 thousand were unemployed. Unemployment rate = 12,748 ÷ (141,608 + 12,748) = 8.26%
In January 2013, 143,322 thousand were employed and 12,332 thousand were unemployed. Unemployment rate = 12,322 ÷ (143,322+12,332) = 7.92%
1(b)
Employment-Population ratio =
In January 2012, 141,608 thousand were employed and total population was 244,663 tnousand. Employment-Population ratio = 141,608 ÷ (141,608 + 242,269) = 36.89%
In January 2013, 143,322 thousand were employed and total population was 242,269 tnousand. Employment-Population ratio = 143,322 ÷ (143,322 + 242,269) = 36.94%
1(c)
The change in unemployment rate from January 2012 to January 2013 is decrease from 8.26% to 7.92%.
So change is (7.92-8.26)/8.26 = -4.07%
Ans:
Let us assume that U denotes Natural rate of unemployment,
S denotes Separation rate
F denotes Finding rate
L denotes Labour Force
In steady state equilibrium equilibrium, flows into unemployment unemployment ( separations ) (“separations”) equal flows from unemployment (“finds”) – use “bathtub theorem”
So we can show in equilibrium, unemployment rate is
Hence, natural Rate of Unemployment for 2014 is as follows:
(U/130) = (0.02 + {0.02+0.20}) = 11.82%
Similarly, natural Rate of Unemployment for 2015 is as follows:
(U/100) = (0.025 + {0.025+0.15}) = 14.29%
Ans: Removing labour restrictions will give freedom to companies to fire staff that is disguised unemployed, hence reducing the rate of disguised unemployment.
In addition, whenever needed these vacancies can be filled with the person who is willing to work.
Hence, there will be overall reduction in unemployment rate.
At the same time, demand for employees will increase because companies can replace low quality employees with high quality employees on the other hand supply remaining constant and hence, wages will increase as per demand and supply rule.
Ans:
Year
CPI
Price