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Questions › IIT JAM › IIT JAM 2021 › Q27
2 marks, −0.667Macroeconomics › Inflation, unemployment and the Phillips curve › Measuring unemploymentModerateabout 2 min

IIT JAM 2021 Question 27: Inflation, unemployment and the Phillips curve

The workforce participation rate of a country is 60%. The country has a population of 100 million of which 6 million are unemployed. The unemployment rate is

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Answer and worked solution

Answer: (B)

With the workforce (employed) at 60%60\%60% of the 100100100 million population, 606060 million are employed. Adding the 666 million unemployed gives a labour force of 666666 million.

The unemployment rate is 666=111\dfrac{6}{66} = \dfrac{1}{11}666​=111​, option (B).

The trap: (D) 110\dfrac{1}{10}101​

Dividing 6 by the 60 million employed (giving 1/10) uses the wrong denominator; the rate is unemployed divided by the labour force of 66 million.

Plain-text version

The workforce participation rate of a country is 60%. The country has a population of 100 million of which 6 million are unemployed. The unemployment rate is (A) 2/11 (B) 1/11 (C) 3/50 (D) 1/10

Inflation, unemployment and the Phillips curve has come up 106 times in 7 exams since 2006.

What this question tests

This question is on Measuring unemployment, part of Inflation, unemployment and the Phillips curve in Macroeconomics.

How the unemployment rate is defined and computed, and the types of unemployment.

TestStop has 18 past-paper questions on this subtopic; the nearest in year are below.

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Question from the IIT JAM 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.