Unemployment and unemployment rates: Practice Questions

According to the economic definition used in Hong Kong, which of the following is NOT a necessary condition for a person to be classified as unemployed?

Suppose the initial labour force is \( 4,000,000 \) and the number of unemployed persons is \( 200,000 \). If \( 40,000 \) unemployed persons become discouraged workers and stop searching for jobs, while other conditions remain unchanged, what is the new unemployment rate (to 2 decimal places)?

An economy is experiencing a significant economic downturn. Initially, its official unemployment rate is 5% and its labour force participation rate is 70% of the working-age population. The working-age population remains constant at 10 million. Over the next quarter, two events occur simultaneously:

(1) 100,000 individuals who were previously classified as unemployed become discouraged and stop actively looking for work.

(2) 50,000 individuals who were previously outside the labour force (e.g., retirees, homemakers) decide to actively seek employment due to financial hardship, but none of them immediately find a job.

What is the net effect of these events on the official unemployment rate and the labour force participation rate?

Which of the following individuals would be excluded from the labour force of an economy?

If a significant number of unemployed individuals stop looking for work because they believe there are no vacancies available, how will this initially affect the official unemployment rate and the size of the labour force?

Define unemployed from an economic perspective.

Explain why a high unemployment rate may lead to a decrease in the overall human capital of an economy.

An economy has an official unemployment rate of \(6\%\), while its natural rate of unemployment is \(4\%\). If there is also a substantial presence of discouraged workers (who have stopped actively looking for jobs but would accept one if offered) and involuntary part-time workers (who desire full-time employment), what is the likely actual state of the labour market and its implication for the economy's output gap?

Define unemployment from an economic perspective. Identify and briefly explain one social cost of high unemployment in Hong Kong.

A recent economic report indicates that Country D's unemployment rate has been rising due to two main factors: a significant number of recent graduates taking time to find their first suitable job, and automation replacing workers in several key industries.

(a) Identify and explain the specific types of unemployment illustrated by each of the two factors mentioned above.

(b) Beyond the immediate loss of income, elaborate on two significant costs that a high and persistent unemployment rate can impose on the overall economy and society.

(c) Suggest one government measure to address the type of unemployment caused by automation, and explain its expected effect.