Macroeconomics 12th Edition by Rudiger Dornbusch ,Stanley Fischer,Richard Startz

Exercise 1

The following information is to be used for calculations of the unemployment rate: Suppose there are two major groups, adults and teenagers, with adults divided into men and women. Teenagers account for 10 percent of the labor force; adults account for 90 percent. Women make up 35 percent of the adult labor force. Suppose also that the unemployment rates for these groups are as follows: teenagers, 19 percent; men, 7 percent; women, 6 percent. a. Calculate the aggregate unemployment rate.
b. What if the share of teenagers in the labor force increases from 10 to 15 percent. How will this affect the aggregate unemployment rate