(c) 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. (d) Illustrate 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.
(c) 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. (d) Illustrate 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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text: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
45,600 Part-Time workers
234 Self-Employed
67,432 (ages 23-25) looking for work
6543 Discouraged Workers
67,890 laid off receptionists
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
Transcribed Image Text:(c) 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.
(d) Illustrate 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.
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