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Macroeconomics

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Calculating the Unemployment Rate

MACRO-VB1E43

Suppose the current unemployment rate in Westeros is very high at 15% and its labor force consists of 2 million people. A major steel manufacturing firm in the region, who just obtained a substantial contract with a foreign firm, declared publically on April 1 that it will be hiring 40,000 workers.

The company intends to hire all workers over the next month and begin work in two months on June 1. The firm also mentions that it anticipates it will win another substantial contract over the next year. Immediately after the firm's announcement, 10,000 former iron workers, who gave up looking for work, immediately sent an employment application to the firm.

1. What is the unemployment rate after April 1 and over the two month period leading up to, but not including, June 1?

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2. What is the unemployment rate on June 1?