PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
7th Edition
ISBN: 9781264088980
Author: Frank
Publisher: MCG
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Chapter 12, Problem 12.2CC
To determine
Calculate the percentage of actual
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Suppose that in the year of 2020, Country A’s natural rate of unemployment was 5% and its actual unemployment rate was 7%. Further, the Country’s GDP in 2020 was $20,932 billion. Compute the Country’s potential GDP in 2020, using Okun's law.
You can use a calculator to answer this question - an actual calculator or the calculator on your phone. Either is fine.
Assume that
U.S. population is 328 million people
70 million individuals are legally classified as unable to work (are less than 16 years of age, institutionalized, or in the military)
96 million who could be working are classified as uninterested working
7 million are classified as unemployed
Given this information, what is the employment to population ratio?
State your answer as a percentage (type in the percentage symbol), and round to one decimal place, i.e. xx.x%
Consider an economy that only produces and consumes two goods - cars and blankets. Suppose the inflation rate based on the
consumer price index is higher during the year than that based on the GDP deflator. Assuming underlying tasted and preferences in
the economy stay the same, what can you say about the price movements of cars and blankets during the year?
The prices of cars and blankets must have changed at different rates, causing consumers to substitute one of the goods for
the other. Since the GDP deflator is calculated based on what is actually purchased, it takes that substitution into account.
O The relative price of cars and blankets must have remained unchanged.
O The prices of cars and blankets must have changed at different rates, causing consumers to substitute one of the goods for
the other. Because the consumer price index is a fixed-weight index, it understates the rate of inflation in this situation.
O Regardless of what happened the prices of cars and blankets during…
Chapter 12 Solutions
PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
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- Suppose the real GDP of an economy is $440 bilition dollars and its unemployment rate is 6%. If the natural rate of unemployment is estimated at 4%, what is the value of the country's potential GDP (LAS) in billions of dollars? Value of the country's potential GDP (LAS) is $ .......billion.arrow_forwardAssume the number of employed people in Pakistan is 22.5 million in 2020. The number of unemployed people during 2020 in Pakistan is 6 million, and the labor force participation rate is 60 percent. (in brief) What is unemployment rate, size of the labor force and working age-population in the year of 2020 in Pakistan?arrow_forwardAssume the number of employed people in Pakistan is 22.5 million in 2020. The number of unemployed people during 2020 in Pakistan is 6 million, and the labor force participation rate is 60 percent. What is unemployment rate, size of the labor force and working age-population in the year of 2020 in Pakistan?arrow_forward
- explain how GDP could be a factor for the unemployment ratearrow_forwardIf the number of people in the labor force is 140 million and 130 million people are employed, then the number of people who are unemployed is _________ million.arrow_forwardAssume that in a country, the total labour force is 150,000 workers, and the total numbers of workers employed is 145,500. What is the unemployment rate in the economy?arrow_forward
- Please provide answer in 1 hrarrow_forwardWhich of the following are true of an economy operating with a negative GDP gap? Check all that apply. a)A worker with a college degree is more likely to be unemployed than a worker without one. b)The suicide rate, crime, and political unrest may be higher than in an economy with a similar potential GDP and a lower unemployment rate. c)Actual real GDP is less than potential real GDP. d)A teenage worker is more likely to be unemployed than an older worker.arrow_forwardQ6. Suppose the number of employed people in an economy is 312,545,372. The unemployment rate in this economy is 7.4 percent, or .074, and the labor force participation rate is 80 percent, or .80. a. What is the size of the labor force? b. How many people are unemployed? c. What is the size of the working-age population?arrow_forward
- Remember Keynes's prediction that working hours would fall to 15 hours per week in the century after 1930. Why do you think working hours have not changed as he expected? Have people's preferences changed? The model focuses on the number of hours workers would choose, so do you think that many employees are now working longer than they would like?arrow_forwardSuppose 35 000 000 people are in the labour force, 18 000 000 people are employed in the public sector and 15 000 000 people are employed in the private sector. How many people are unemployed?arrow_forwardYou can use a calculator to answer this question - an actual calculator or the calculator on your phone. Either is fine. Assume that U.S. population is 328 million people 70 million individuals are legally classified as unable to work (are less than 16 years of age, institutionalized, or in the military) 96 million who could be working are classified as uninterested working 7 million are classified as unemployed Given this information, what is the labor force participation rate? State your answer as a percentage (type in the percentage symbol), and round to one decimal place, i.e. xx.x%arrow_forward
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