There are 80 million citizens in an economy. 45 million people are in the labor force and 1.8 million are unemployed. a) Calculate the unemployment rate. b) The natural rate of unemployment is 5%. How will the inflation rate change? c) Due to the progress of digitalization, the natural rate of unemployment decreases to 3.5% in the next year. However, the actual unemployment rate initially remains constant due to other effects. How does the inflation rate change?

There are 80 million citizens in an economy. 45 million people are in the labor force and 1.8 million are unemployed. a) Calculate the unemployment rate. b) The natural rate of unemployment is 5%. How will the inflation rate change? c) Due to the progress of digitalization, the natural rate of unemployment decreases to 3.5% in the next year. However, the actual unemployment rate initially remains constant due to other effects. How does the inflation rate change?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter1: Ten Principles Of Economics

Section: Chapter Questions

Problem 6CQQ

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