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9. Consider the following information about a particular economy:

- Total population: 70 million
- Total labor force: 40 million
- Number of employed: 25 million
- Frictional and structural unemployment: 5 million

a. Calculate the total unemployment rate.

b. Calculate the total cyclical unemployment.

10. What are the main causes of current inflation in Ethiopia? What is its impact on the economy? Discuss briefly.



Answer :

GinnyAnswer

Final answer:

Explanation of calculating unemployment rate, determining full employment, and GDP deflator calculation.


Explanation:

Unemployment Rate Calculation:

1. Unemployment rate = (Number of unemployed workers / Labor force) x 100%

2. Full employment level is when there is no cyclical unemployment, meaning all frictional and structural unemployment is accounted for.

Unemployment Rate Change:

- Initially: 10% unemployment

- After: 5.56% unemployment, indicating improvement.

Nominal GDP to Deflator:

Implicit Price Deflator = (Nominal GDP / Real GDP) x 100


Learn more about Unemployment rate, GDP deflator, economy improvement here:

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