PRINCIPLES OF MACROECONOMICS-CONNECT ACC
7th Edition
ISBN: 9781264088485
Author: Frank
Publisher: MCG
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Chapter 12, Problem 4RQ
To determine
Effects of recession in the natural rate of
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Suppose the number of employed people in Pakistan is 20.5 million. The unemployment rate in this economy is 8.8 percent, and the labor force participation rate is 65 percent.
What is the size of the labor force and working-age population?
How many people are unemployed?
Explain and analyze different government policies which affect the unemployment rate in Pakistan? ( Maximum 200 words).
Before June 2020, the labor market in Pakistan was at equilibrium with an equilibrium wage (WE) of Rs. 15,000 and equilibrium quantity of labor (LE) 10 million. In the last week of June, 2020, government of Pakistan imposed a minimum wage Act raising the minimum wage to Rs. 20,000. Using a graph, explain the effect of imposition of minimum wage on unemployment in labor market of Pakistan .
Consider a hypothetical economy in which the labor force consists of 200 people. Of those, 180 people are employed full-time and 20 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 Labor Force
х 100
20
х 100
200
= 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
Unemployment Rate
A: Firms reduce work hours by 10%. The number of involuntary part-time workers rises
%
as firms respond to the reduction in the demand…
<
Consider an economy that initially has a labor force of 1,000 workers. Of these workers, 950.0 are employed and each works 40 hours per week. Ten units of output are produced by each hour of labor.
The total number of hours worked per week is 38000 (Round your answer to the nearest whole number).
The total output per week is 380000 (Round your answer to the nearest whole number).
The unemployment rate is 5% (Round your answer to one decimal place).
The economy enters a recession. Employment falls by 4%, and the number of hours per week worked by each employed worker fails by 2%.
Employment is now 912 (round to the nearest whole number), and the total number of hours worked per week is now 35,750.4 (round your answer to one decimal place).
In addition, 2.0% of the labor force becomes discouraged at the prospect of finding a job and leaves the labor force.
The size of the labor force is now
(Round your answer to the nearest whole number)
The number of workers unemployed is ☐ (Round…
Chapter 12 Solutions
PRINCIPLES OF MACROECONOMICS-CONNECT ACC
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