Consider a hypothetical economy in which the labor force consists of 100 people. Of those, 90 people are employed full-time and 10 people are unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore, initially the unemployment rate is calculated as follows: Unngled Unemployment Rate Number of the Laber F100 10 x 100 100 10% Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor market changes in this economy. Scenario A: Firms reduce work hours by 30%. The number of involuntary part-time workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 28 hours per week. B: Firms reduce employment by 30%. The number of unemployed workers rises as firms Unemployment Rate

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Consider a hypothetical economy in which the labor force consists of 100 people. Of those, 90 people are employed full-time and 10 people are
unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore,
initially the unemployment rate is calculated as follows:
Unemployment Rate -
Number of Unemployed People
Number of People in the Laber Far 100
10
X100
10%
Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The
following table offers two possible scenarios resulting from the recession.
Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor market
changes in this economy.
Scenario
A: Firms reduce work hours by 30%. The number of involuntary part-time workers rises
as firms respond to the reduction in the demand for their products by reducing the hours
of each employed person from 40 to 28 hours per week.
Unemployment Rate
B: Firms reduce employment by 30%. The number of unemployed workers rises as firms
respond to the reduction in the demand for their products by laying off 27 previously
employed workers.
Tom of faire The unemployment rate for scenario A in the previous table understates the true extent of underemployment in the economy because
Transcribed Image Text:Consider a hypothetical economy in which the labor force consists of 100 people. Of those, 90 people are employed full-time and 10 people are unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore, initially the unemployment rate is calculated as follows: Unemployment Rate - Number of Unemployed People Number of People in the Laber Far 100 10 X100 10% Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor market changes in this economy. Scenario A: Firms reduce work hours by 30%. The number of involuntary part-time workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 28 hours per week. Unemployment Rate B: Firms reduce employment by 30%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 27 previously employed workers. Tom of faire The unemployment rate for scenario A in the previous table understates the true extent of underemployment in the economy because
Attempts
Lo No Harm/0.5
3. Discouraged workers and involuntary part-time workers
Simply counting the number of unemployed workers will not necessarily give the Bureau of Labor Statistics (BLS) the most accurate indication of the
extent of underemployment in the economy. Some part-time workers will be counted as employed even if they'd like to work full-time. Furthermore,
some jobless workers will not qualify as unemployed because they have given up on their job search, frustrated with their inability to find work.
Fortunately, the BLS can use the information provided in the household survey to classify workers in ways that account for these types of
underemployment.
The BLS classifies those who work part-time because they cannot find full-time employment as involuntary part-time workers. The BLS classifies
as discouraged workers those who want and are available for work but have not searched for employment during the previous four weeks because
they believe their job search is currently futile. By keeping track of discouraged and involuntary part-time workers, the BLS gets a clearer picture of
underemployment than if it looked only at the number of unemployed workers.
Which of the following statements correctly describe discouraged workers? Check all that apply.
They have not looked for work during the past four weeks.
They would like to have a job.
D They are employed workers who want to earn higher wages.
They are full-time workers who would like to work only part-time.
Consider a hypothetical economy in which the labor force consists of 100 people. Of those, 90 people are employed full-time and 10 people are
unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore,
initially the unemployment rate is calculated as follows:
Newberat themed Books
Transcribed Image Text:Attempts Lo No Harm/0.5 3. Discouraged workers and involuntary part-time workers Simply counting the number of unemployed workers will not necessarily give the Bureau of Labor Statistics (BLS) the most accurate indication of the extent of underemployment in the economy. Some part-time workers will be counted as employed even if they'd like to work full-time. Furthermore, some jobless workers will not qualify as unemployed because they have given up on their job search, frustrated with their inability to find work. Fortunately, the BLS can use the information provided in the household survey to classify workers in ways that account for these types of underemployment. The BLS classifies those who work part-time because they cannot find full-time employment as involuntary part-time workers. The BLS classifies as discouraged workers those who want and are available for work but have not searched for employment during the previous four weeks because they believe their job search is currently futile. By keeping track of discouraged and involuntary part-time workers, the BLS gets a clearer picture of underemployment than if it looked only at the number of unemployed workers. Which of the following statements correctly describe discouraged workers? Check all that apply. They have not looked for work during the past four weeks. They would like to have a job. D They are employed workers who want to earn higher wages. They are full-time workers who would like to work only part-time. Consider a hypothetical economy in which the labor force consists of 100 people. Of those, 90 people are employed full-time and 10 people are unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore, initially the unemployment rate is calculated as follows: Newberat themed Books
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Unemployment
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education