If labour force in Utopia grows by 7 per cent and employment grows by 5 percent unemployment rate will:
A) increase by about 2 percent.
B) remain unchanged.
C) fall by about 2 percent.
D) rise by about 12 percent.

Question

Quizplus · Accepted Answer

The unemployment rate will increase because the labor force grows at a faster rate (7%) than employment does (5%), meaning not all new entrants into the labor force find jobs, thus increasing the unemployment rate.

If Labour Force in Utopia Grows by 7 Per Cent