The unemployment rate is defined as the percentage of unemployed workers in the labor force: Unemployment Rate = At a minimum wage of $9.90 per hour, the unemployment rate among unskilled workers is approximately Unemployed 100 Labor Force Recall that according to the article, a bill moving through the legislature would allow small businesses in Illinois to collect a tax credit to offset the additional cost of a higher minimum wage. The previous graph shows an initial tax credit of $0. For simplicity, assume that small businesses are th primary demanders of unskilled workers, and they would receive a tax credit equating to $1 per hour. True or False: With a minimum wage of $9.90, unemployment of unskilled workers is higher with the tax credit versus without it. True False
The unemployment rate is defined as the percentage of unemployed workers in the labor force: Unemployment Rate = At a minimum wage of $9.90 per hour, the unemployment rate among unskilled workers is approximately Unemployed 100 Labor Force Recall that according to the article, a bill moving through the legislature would allow small businesses in Illinois to collect a tax credit to offset the additional cost of a higher minimum wage. The previous graph shows an initial tax credit of $0. For simplicity, assume that small businesses are th primary demanders of unskilled workers, and they would receive a tax credit equating to $1 per hour. True or False: With a minimum wage of $9.90, unemployment of unskilled workers is higher with the tax credit versus without it. True False
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:2. The connection between macroeconomics and microeconomics
While economists measure unemployment at the macroeconomic level, microeconomic forces are often responsible for this macro aggregate. In other
words, the tie between microeconomics and macroeconomics is inevitable when discussing the level of unemployment in an economy.
Suppose the following graph represents the market for unskilled labor in a fictional economy. These workers typically represent the young,
inexperienced, or uneducated part of the labor force and are therefore most effected by changes in the unemployment rate.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
WAGE (Dollars per hour)
15
12
0
0
400
Labor Supply
Labor Demand
800
200
QUANTITY (Thousands of workers)
600
1000
Graph Input Tool
Labor Market
Wage Rate
(Dollars per hour)
Labor Demanded
(Thousands of
workers)
Surplus Labor
(Thousands of
workers)
Labor Demand Shifters
Tax Credit
(Dollars per hour)
$9.9
If the wage is not allowed to fall below $9.90 per hour, the size of the unskilled labor force is
workers are considered unemployed.
340
320
0
Labor Supplied
(Thousands of
workers)
?
Suppose the minimum wage in this economy is $9.90 per hour. An unemployed worker is defined as someone who is willing to work at the prevailing
wage but is unable to find employment. Because the minimum wage lies above the equilibrium wage, it is binding, which means it is also the
prevailing wage.
workers, and
660
0 unskilled
Transcribed Image Text:The unemployment rate is defined as the percentage of unemployed workers in the labor force:
Unemployment Rate =
Unemployed
Labor Force
At a minimum wage of $9.90 per hour, the unemployment rate among unskilled workers is approximately
"100
Recall that according to the article, a bill moving through the legislature would allow small businesses in Illinois to collect a tax credit to offset the
additional cost of a higher minimum wage. The previous graph shows an initial tax credit of $0. For simplicity, assume that small businesses are the
primary demanders of unskilled workers, and they would receive a tax credit equating to $1 per hour.
True
True or False: With a minimum wage of $9.90, unemployment of unskilled workers is higher with the tax credit versus without it.
False
Expert Solution
Step 1
Introduction
When a person is able and eager to work, but they are not employed, they are considered to be unemployed. The percentage of individuals who are unemployed in the labor force is known as the unemployment rate. Thus, knowing who is employed is necessary to calculate the unemployment rate.
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