PRINCIPLES OF MACROECONOMICS-CONNECT ACC
7th Edition
ISBN: 9781264088485
Author: Frank
Publisher: MCG
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Chapter 12, Problem 12.2CC
To determine
Calculate the percentage of actual
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Suppose that in the year of 2020, Country A’s natural rate of unemployment was 5% and its actual unemployment rate was 7%. Further, the Country’s GDP in 2020 was $20,932 billion. Compute the Country’s potential GDP in 2020, using Okun's law.
Suppose the unemployment rate is 9%, the natural rate of unemployment is 4.5%, and Okun’s scalar has an absolute value of .015. If potential GDP is $20T, what do you expect the actual GDP to be? (Round to nearest $10B)
You can use a calculator to answer this question - an actual calculator or the calculator on your phone. Either is fine.
Assume that
U.S. population is 328 million people
70 million individuals are legally classified as unable to work (are less than 16 years of age, institutionalized, or in the military)
96 million who could be working are classified as uninterested working
7 million are classified as unemployed
Given this information, what is the employment to population ratio?
State your answer as a percentage (type in the percentage symbol), and round to one decimal place, i.e. xx.x%
Chapter 12 Solutions
PRINCIPLES OF MACROECONOMICS-CONNECT ACC
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- Consider an economy that only produces and consumes two goods - cars and blankets. Suppose the inflation rate based on the consumer price index is higher during the year than that based on the GDP deflator. Assuming underlying tasted and preferences in the economy stay the same, what can you say about the price movements of cars and blankets during the year? The prices of cars and blankets must have changed at different rates, causing consumers to substitute one of the goods for the other. Since the GDP deflator is calculated based on what is actually purchased, it takes that substitution into account. O The relative price of cars and blankets must have remained unchanged. O The prices of cars and blankets must have changed at different rates, causing consumers to substitute one of the goods for the other. Because the consumer price index is a fixed-weight index, it understates the rate of inflation in this situation. O Regardless of what happened the prices of cars and blankets during…arrow_forwardSuppose you are given the following data for a small economy: Number of unemployed workers: 1,000,000. Labor force: 10,000,000. Based on this data, answer the following: What is the unemployment rate? Can you determine whether the economy is operating at its full employment level? Now suppose people who had been seeking jobs become discouraged, and give up their job searches. The labor force shrinks to 900,500 workers, and unemployment falls to 500,000 workers. What is the unemployment rate now? Has the economy improved?arrow_forwardIf the natural rate of unemployment is 5.0 percent, the current unemployment rate is 7.3 percent, and the current GDP is 6 billion, according to Okun's law, the economy's potential output (in billion dollars, rounded to two decimal points) is:arrow_forward
- Assume the number of employed people in Pakistan is 22.5 million in 2020. The number of unemployed people during 2020 in Pakistan is 6 million, and the labor force participation rate is 60 percent. (in brief) What is unemployment rate, size of the labor force and working age-population in the year of 2020 in Pakistan?arrow_forwardAssume the number of employed people in Pakistan is 22.5 million in 2020. The number of unemployed people during 2020 in Pakistan is 6 million, and the labor force participation rate is 60 percent. What is unemployment rate, size of the labor force and working age-population in the year of 2020 in Pakistan?arrow_forwardHelp me with the following questions. Q) Suppose that in 2013 , potential GDP in the nation of Octavia is $ 85,000, real GDP is $75,000 and the potential GDP grows at the rate of 2% per year ... a) if real GDP is $78,000 in 2014 , using Okun's law .Calculate the cyclical rate of unemployment. b) If real GDP is $ 83,000 in 2015, using Okuns law, calculate the cyclical rate of unemployment.arrow_forward
- Question No.15: Suppose the number of employed people in an economy is 121,166,640. The unemployment rate in this economy is 10.4 percent, or .104, and the labor force participation rate is 72.5 percent, or .725. What is the size of the labor force? How many people are unemployed? What is the size of the working-age population?arrow_forwardAssume the number of employed people in Pakistan is 22.5 million in 2020. The number of unemployed people during 2020 in Pakistan is 6 million, and the labor force participation rate is 60 percent. What is unemployment rate, size of the labor force and working age-population in the year of 2020 in Pakistan? In each of the following cases, does the increase in prices affect CPI, GDP deflator, or both in Pakistan? Analyze and justify your answer. The price of imported capital goods used in the production of sugar has increased. The price of Tapal tea has increased. Analyze and explain the effect of the minimum wage law on the unemployment rate. Explain your answer by using graph.arrow_forwardSuppose that the natural rate of unemployment is 5.7 percent. If unemployment has for some time been varying between 5.1 and 5.3 percent, we should be at an actual real GDP the natural real GDP, and should expect inflation to bearrow_forward
- explain how GDP could be a factor for the unemployment ratearrow_forwardAnswer the following macroeconomics questions.i. What is the difference between nominal GDP and real GDP? Which one of them is used to calculate the economic growth rate? Justify your answer.ii. Give the equation used to calculate the unemployment rate. State the different types of unemployment. In your opinion, which type is the most problematic one? Justify your answer.iii. Governments may achieve certain economic goals; say controlling inflation, by implementing fiscal and/or monetary policies. Briefly explain the difference between fiscal and monetary policies.arrow_forwardIf the number of people in the labor force is 140 million and 130 million people are employed, then the number of people who are unemployed is _________ million.arrow_forward
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