1. Suppose that 20,000 of the employed switches to jobs in the underground economy. When interviewed by STATIN, 50% of these switchers report that they are not working and not seeking work, while the other 50% report that they are not working but seeking work. Explain what happens to the official unemployment rate and the “true” unemployment rate. 2. llustrate and carefully explain the impact of an increase in the income tax rate from 25 percent to 35 percent on the demand for labour, supply of labour, equilibrium wage and level of employment. 987,156 Currently Working9845 (ages 13-14) looking for work23,000 volunteer workers12,000 (ages 15) looking forwork56 family workers who worked15 hrs a week6543 Discouraged Workers67,890 laid off receptionistslooking for work45,600 Part-Time workers234 Self-Employed67,432 (ages 23-25) looking for work544,321 (ages 16-20) looking for work Current population is6,000,0005654 Temp Workers543 recent university graduates thatare going back to graduate school5000 armed forces3500 institutionalized

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Answered: . Suppose that 20,000 of the employed…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Suppose that 20,000 of the employed switches to jobs in the underground economy. When interviewed by STATIN, 50% of these switchers report that they are not working and not seeking work, while the other 50% report that they are not working but seeking work. Explain what happens to the official unemployment rate and the “true” unemployment rate.

2. llustrate and carefully explain the impact of an increase in the income tax rate from 25 percent to 35 percent on the demand for labour, supply of labour, equilibrium wage and level of employment.

987,156 Currently Working
9845 (ages 13-14) looking for work
23,000 volunteer workers
12,000 (ages 15) looking for
work
56 family workers who worked
15 hrs a week
6543 Discouraged Workers
67,890 laid off receptionists
looking for work
45,600 Part-Time workers
234 Self-Employed
67,432 (ages 23-25) looking for work
544,321 (ages 16-20) looking for work Current population is
6,000,000
5654 Temp Workers
543 recent university graduates that
are going back to graduate school
5000 armed forces
3500 institutionalized

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