Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 30, Problem 4.2P
To determine
Three slippages between changes in output and changes in the
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Q)The natural rate of unemployment is the frictional rate that exists in every economy when people move between jobs, and economists refer to full employment when the rate of unemployment is at the natural rate. The natural rate of unemployment in Europe is normally twice and at times three times that of the USA. Can you explain why?
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Chapter 30 Solutions
Principles of Economics (12th Edition)
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- In January 2022 the adult population in the fictional country Kellytopia was 140 million, total employment was 90 million, the labor force was 105 million, and there were 1.2 million discouraged workers. A) What was the unemployment rate? Show your work. B) What was the labor force participation rate? Show your work. C) Now, assume that a year later in January 2022, the adult population was 142.8 million, total employment was 90 million, the labor force was 104 million, and there were 2.2 million discouraged workers. Mark Kelly, the fictional President of the fictional country Kellytopia claims that, through his great and benevolent leadership, Kellytopia’s employment situation has improved since last year. Do you agree with his assertion? Why or why not? D) On a graph, show how the labor market with efficiency wages is impacted by the decline in the labor force participation rate described in part C.arrow_forwardplease answer these two questionsarrow_forwardAssume the following for the town of Boone: The town has a total population of 60,000 people, of which 2,000 are under 16 years of age or are institutionalized; 4,000 are full-time students who are not employed and are not seeking work; and 50,000 are employed. The rest of the people are out of work but have been actively seeking work within the past four weeks. What is the unemployment rate in Boone? Instructions: Round your answer to 1 decimal place. percentarrow_forward
- Suppose that a country experiences a reduction in productivity – that is, an adverse shock to the production function.A) What happens to the labor demand curve? Show the change on the graph.B) How would this change in productivity affect the unemployment rate if the labor market is always in equilibrium?Explain your answer referring to the graph.arrow_forwardIf some employed workers exit the labor force, the unemployment rate will be ______arrow_forwardIn March 2007, the U.S. unemployment rate was 4.4 percent. In August 2008, the unemployment rate was 6.1 percent. Predict what happened to (1) unemployment between March 2007 and August 2008, assuming that the labor force was constant and (2) the labor force between March 2007 and August 2008, assuming that unemployment was constant.arrow_forward
- Which of the following would be most likely to reduce frictional unemployment? Explain your answer. The govt. eliminates the minimum wage. The govt. increases unemployment insurance benefits. A new law bans labor unions. More workers post their resumes at Monster.com, and more employers use Monster.com to find suitable workers to hire. Sectoral shifts become more frequent.arrow_forwardThis question explores the calculation of the unemployment rate. You will be provided some imperfect employment data for four different countries and asked to identify the unemployment rate. Task 1: The population of Asartaland is 95. Of these 95 individuals, 75 are in the labor force and 65 are employed. What is the unemployment rate in Asartaland? Task 2: The population of Millsville is 130. Of these 130 individuals, 90 are in the labor force and 20 are unemployed. What is the unemployment rate in Millsville?arrow_forwardEven an economy that is operating at peak efficiency will have a positive unemployment rate. Economists call this "full employment". Full employment is also known as The natural rate of unemployment frictional unemployment cyclical unemployment Structural unemploymentarrow_forward
- Differentiate between the unemployment rate and the natural unemployment rate as the economy movesthrough a business cyclearrow_forwardSuppose that in a population of 200 million persons, 150 million are in the labor force and 120 million are employed. Then the unemployment rate for this economy is: A) 20 percent B) 40 percent C) 60 percent D) 80 percentarrow_forwardExplain whether each of the following events increases decreases or has no effect on the unemployment rate in the labor force participation rate after a long search, Jon finds a job TYRION full-time college student graduates and is immediately employed after an unsuccessful job search, Aria gives up looking in retires Danny quit her job to become a stay-at-home mom Susan has a birthday becomes an adult but has no interest in working Jamie has a birthday becomes an adult and starts looking for a job Chris dies while enjoying retirement John dies working long hours at the officearrow_forward
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