MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 6, Problem 3TY
To determine
Effect of difference in actual
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Assume 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?
If GDP is currently running faster than potential GDP, can we say, based on that observation alone, that inflation will rise in the near future?
Why is it difficult to accurately measure the unemployment rate in the U.S.? Do you think the current unemployment rate is overstated, understated, or exactly right?
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- Why is the unemployment rate considered to by some to be an incomplete measure of economic hardship and lost output? What alternative measure is provided by the Bureau of Labor Statistics to measure lost economic productivity?arrow_forwardIf an economy has 10,000 people that are not working (but are looking and available for work) and 90,000 people who are working, what is its unemployment rate? Now suppose that 4,000 of the people looking for work get discouraged and give up on searching. What happens to the unemployment rate? Would this be interpreted as good news for the economy or bad news? Explain.arrow_forwardWhy do economists (and politicians) focus on only a few measures - GDP, inflation, and unemployment - when describing the state of the economy? Would it make more sense to consider all available data, like the production of each industry, changes in the price of every good and service, or unemployment for each industry? Why or why not?arrow_forward
- between the unemployment rate and the natural unemployment rate as the economy moves through a business cycle.arrow_forwardThe town of Villageton has 500 residents, of which 300 are employed, 30 are not working but actively seeking work, 70 are children in school, 40 are retirees, 30 are full-time college students, 20 are institutionalized, and 10 are discouraged workers. Calculate the unemployment rate in Villageton. Suppose 10 of the 30 college students graduate and enter the labor force actively seeking work, but only 5 find a job. How does this change the unemployment rate in Villageton? Is this economy “fully-employed” according to the U.S. definition? Why or why not? How would the “U6” definition of unemployment differ from your answer to question #2a? Would it be higher or lower? Calculate the labor force participation rate (LFPR) using the numbers above.arrow_forwardWhat are the two biggest recessions in terms of length and magnitude from the graph, the shaded areas show recession and 2020 is not included? How does the unemployment rate react during the two main recessions you have identified? What was the level of the unemployment rate during the first and the last quarter of negative growth for those two recessions? What do you conclude about the link between recession and the variation in unemployment?arrow_forward
- Now suppose 4,000 of the people looking for work get discouraged and give up their searches. What happens to the unemployment rate? Would you interpret this as good news for the economy or bad news?arrow_forwardEconomists believe that the United States is experiencing full employment when the unemployment rate is: A. 0% B. 7-8% C. 5-6% C.arrow_forwardEconomists forecast future economic conditions by studying variables that tend to fluctuate in advance of the overall economy. The most significant of these variables are known as leading indicators, and they compose the index of leading economic indicators. Which of the following variables are measured as part of this index? Check all that apply. Supplier deliveries The ratio of elderly to nonelderly workers New orders for consumer goods Stock prices The money supply True or False: Businesses and government care only about long-run economic forecasts, because they cannot adapt policy or output to accommodate short-run fluctuations. False True Suppose the most recent data show that the average initial weekly claims for unemployment insurance have recently decreased. This change suggests ____ period in the coming months.arrow_forward
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