Question

Suppose canada has a population of 30 million people and a labor force participation rate of 2/3. furthermore, suppose the natural rate of unemployment in canada is 7%. if the current number of unemployed people is 1.4 million people, what can we conclude about canada's economy?

Answer 1

There is no Cyclical Unemployment in Canada currently.

Step-by-step explanation:

Labour Force Participation Rate is the proportion of people between working age group, currently working or seeking for job.

If Canada's population = 30 million people, labour force participation rate = 2/3rd. Then, people doing or seeking job in Canada = 2/3 (30) = 20 million.

Unemployment is when people able & willing to do job (labour force participants) don't get job.

Unemployment rate is determined as percentage of people from the labour force, unable to get a job. Here, = (1.4 / 20 ) x 100 = 0.07 i.e 7%

So, we can say that Canada's current unemployment is only natural (structural & fictional unemployment). There is no cyclical unemployment.