Question

Suppose canada has a population of 30 million people, and labore force participation rate of 2/3. furthermoew, suppose the natural rate of unemployment in canada is 7%. if the current number of unemployed people is 1 million people, what can we conclude about canadas economy

Answer 1

Inflation is 110

Explanation:

The consumer price index is the ratio of the basket prices of the current year to the basket price of the base year multipliers by 100, this helps us to determine inflation

now, cpi in second year = $5500 / 5000^{*} 100$

                                         = 110

Answer 2

Answer:

the unemployment rate is above the natural rate of unemployment

Explanation:

Let us understand what is unemployment rate and natural rate of unemployment.

Unemployment rate:

It is the number of person in the country without job.

This regards to the cyclical unemployment.

It means when there is a country and educated people, there is a possibility of not getting job due to various reason like unskilled or skill does not match the requirement, etc.

Natural rate of unemployment:

Natural rate of unemployment is calculated with respect to the "frictional and structural unemployment". If this is above then it means that many employees are taken away from the company due to recession.

When there is huge unemployment, then the unemployed people might get demotivated and also lose their skills since they are not currently running in the market.