Chapter 7

Final Grade 100/100

2. (Measuring Unemployment) Suppose the S. non-institutional adult population is 230 million and the labor force participation rate is 67 percent.
   1. What would be the size of the U.S. labor force? 154,100,000 civilian labor force/total non-institutional population
   2. If 85 million adults are not working, what is the unemployment rate? 4%

3. (Types of Unemployment) Determine whether each of the following would be considered frictional, structural, seasonal, or cyclical unemployment:
   1. A UPS employee who was hired for the Christmas season is laid off after Christmas. Seasonal Unemployment
   2. A worker is laid off due to reduced aggregate demand in economy. Cyclical Unemployment

1. A worker in a DVD rental store becomes unemployed as video-on-demand cable service becomes more popular. Structural Unemployment
2. A new college graduate is looking for employment. Frictional Unemployment

5. (The meaning of Full Employment) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would a generous unemployment insurance system affect the full employment figure?

When the economy  is at full employment, the unemployment  rate is not at zero percent,  because of the existence of the natural  rate of unemployment.  A generous unemployment  insurance system may skew the full employment figure. A generous unemployment insurance system may reduce the urgency  to find employment, thereby  increasing the unemployment   level.

7. (Inflation) Here are some recent data on the U.S. consumer price index:

Year    CPI          Year     CPI          Year    CPI

1992    140.3        1999    166.5         2006    201.6

1993    144.5        2000    172.2         2007    207.3

1994    148.2        2001     177.1         2008    215.3

1995    152.4       2002      179.9         2009    214.5

Compute the inflation rate for each year 1993-2012 which were years of inflation. In which years did deflation occur? In which years did disinflation occur? Was there hyperinflation in any year?

a.

2009. Deflation occurred in 2009.

2012. Disinflation occurred in 1994, 1997, 1998, 2001, 2002, 2006, 2007, 2009, 2012.

1. Hyperinflation did not occur in any of the given

Chapter 8

1. (Measuring Labor Productivity) How do we measure labor productivity? How do changes in labor productivity affect the U.S. standard of living?

1. Labor productivity is the output per unit of labor and measures total output divided by hours of!abor employed to produce that output. p. 125

1. Changes in labor productivity increase the U.S. standard of

c.

5. (Long-Term Productivity Growth) Suppose that two nations start out in 2013 with  identical levels of output per work hour-say. $100 per In the first nation, labor productivity grows by I percent per year. In the second, it grows by 2 percent per year. Use a calculator or a

spreadsheet to determine how much output per hour each nation will be producing 20 years later, assuming that  labor productivity  growth rates do not  change. Then determine how much   each will be producing per hour I 00 years later. What do your results tell you about the effects of small differences in productivity  growth  rates?

1. Small differences in productivity growth rates lead to sizeable differences over   b.

c.

d.

7. (Technological Change and Unemployment)  What are some examples, other than those  given in the chapter, of technological change that has caused unemployment? And what are some examples of new technologies that have created jobs? How do you think you might measure the net impact of technological change on overall employment and GDP in the United States?
   1. Technological change has forced citizens to either seek further education to develop new skills or to further seek out employment that require human

1. Examples of new technologies that have created jobs include advancements in social media, biotechnology, and electronic delivery of daily newspapers via the

1. One way to measure the net impact of technological change on overall employment  and  GDP in the US would be to isolate a new advancement in technology and study it over a period of years in order to measure the growth or decline in consumer prices and also the growth of wealth amongst the citizens of the US over that same time

d.

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