Why is the labour force the denominator?

Only people in work or actively looking belong to it; using total population would count children and retirees as unemployed.

Does a falling rate always mean better jobs?

No. If discouraged workers stop looking they leave the labour force and the rate falls without any new jobs.

S4 Economics Unemployment, Paper 1: measuring unemployment and types of unemployment

2026-11-02

Tutor Prep Guide · Primary English

Ten graded items on the unemployment rate, participation rates, discouraged workers and the structural-cyclical split, each with an answer.

Focus　Divide by the labour force, use the participation rate for the labour force, watch for people leaving it and classify by cause.

01　Paper details (check answers afterwards)

Item	Detail
Questions	10
Suggested time	25
Difficulty mix	Foundation 4 · Intermediate 3 · Challenge 2 · Error redo 1
Chapter	Chapter: S4 Economics: Unemployment
Level	Four basic, three advanced, two challenge and one error-repair item

02　Questions (10 items)

FoundationEmployment is 3.80 million and unemployment 0.20 million. Find the unemployment rate.
FoundationThe labour force is 5.00 million and 0.25 million are unemployed. Find the unemployment rate.
FoundationWhich of these are outside the labour force: a retiree, a full-time homemaker and a child under 15?
FoundationWrite the formula for the unemployment rate.
IntermediatePopulation is 7.00 million, the participation rate is 60% and unemployment is 5%. How many are unemployed?
IntermediateEmployment is 3.80 million and unemployment 0.20 million; 0.10 million jobless workers stop looking. Find the new unemployment rate.
IntermediateFactories move abroad, leaving assembly workers jobless for years. What type of unemployment is this?
ChallengeWith the labour force fixed at 4.00 million, unemployment rises from 5% to 8%. By how much does the number unemployed rise?
ChallengeSpending cuts slow the economy and unemployment rises. What type of unemployment is this?
Error redoError repair: a student counts full-time students aged 15 as unemployed. Why is that wrong?

03　Answers and one-line notes

#	Answer	One-line note
1	5%	The labour force is employment plus unemployment, or 4.00 million, and 20 over 400 is 0.05.
2	5%	Unemployment divided by the labour force: 25 over 500 is 5%.
3	All three are excluded	The labour force counts only people in work or actively seeking work, so retirees, homemakers and children are excluded.
4	Unemployed divided by the labour force, times 100%	The denominator is the labour force, not the total population, which is the commonest slip.
5	0.21 million	The labour force is 700 times 0.6, or 420, and 5% of that is 21.
6	About 2.56%	The labour force falls to 3.90 million and unemployment to 0.10 million, so 10 over 390 is 0.0256.
7	Structural unemployment	A permanent fall in demand for a skill is structural unemployment and calls for retraining rather than demand stimulus.
8	0.12 million	Unemployment rises from 0.20 to 0.32 million, a rise of 0.12 million.
9	Cyclical unemployment	Insufficient aggregate demand gives cyclical unemployment, which responds to expansionary fiscal or monetary policy.
10	They are neither employed nor actively seeking work, so they are outside the labour force	The unemployed must be able and actively looking for work; full-time students are outside the labour force.

04　What to do after marking

After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
Repeat the same item two days later; move to the next paper only when both attempts are correct.
Parents only need the answer and note columns; there is no need to explain every item.

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