Consider an economy that initially has a labor force of 2,000 workers. Of these workers, 1,900 are employed. The economy enters a recession. The number of employed workers falls by 4%. In addition, 0.2% of the labor force becomes discouraged at the prospect of finding a job and leaves the labor force. Show your calculation for the following. a. How many workers are unemployed before the recession? What is the unemployment rate before the recession? b. After the recession begins, what is the size of the labor force? How many workers are employed? How many workers are unemployed? What is the unemployment rate? c. Suppose that total output falls by 8% in the recession, what is the value of the Okun's law coefficient relating the loss of output to the increase in unemployment?

Consider an economy that initially has a labor force of 2,000 workers. Of these workers, 1,900 are employed. The economy enters a recession. The number of employed workers falls by 4%. In addition, 0.2% of the labor force becomes discouraged at the prospect of finding a job and leaves the labor force. Show your calculation for the following. a. How many workers are unemployed before the recession? What is the unemployment rate before the recession? b. After the recession begins, what is the size of the labor force? How many workers are employed? How many workers are unemployed? What is the unemployment rate? c. Suppose that total output falls by 8% in the recession, what is the value of the Okun's law coefficient relating the loss of output to the increase in unemployment?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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