Consider a hypothetical economy in which the labor force consists of 300 people. Of those, 270 people are employed full-time and 30 people are unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore, initially the unemployment rate is calculated as follows: Unemployment Rate= -10% x 100 in the Labor F x 100 Suppose a reduction in foreign demand for this economy's products causes an economic reces following table offers two possible scenarios resulting from the recession. period of declining output. The Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor market changes in this economy. Scenario A: Firms reduce work hours by 10%. The number of involuntary part-time workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 36 hours per week. 8: Firms reduce employment by 10%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 27 previously employed workers. Unemployment Rate

Consider a hypothetical economy in which the labor force consists of 300 people. Of those, 270 people are employed full-time and 30 people are unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore, initially the unemployment rate is calculated as follows: Unemployment Rate= -10% x 100 in the Labor F x 100 Suppose a reduction in foreign demand for this economy's products causes an economic reces following table offers two possible scenarios resulting from the recession. period of declining output. The Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor market changes in this economy. Scenario A: Firms reduce work hours by 10%. The number of involuntary part-time workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 36 hours per week. 8: Firms reduce employment by 10%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 27 previously employed workers. Unemployment Rate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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