Problem Set - IV - Answer Key.pdf

Problem Set - IV - Answer Key.pdf - Middle East Technical...

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1 Middle East Technical University Fall, 2016 Department of Economics ECON 202 Section 2 Instructor: Dr. Pınar Derin - Güre TA: Özgen Öztürk Due Date: Thursday, December 1, 2016 in Room A211 (until 17:00) . No late problem sets will be accepted. PLEASE WRITE YOUR ANSWERS IN A SEPARATE PAPER. Note: Please keep your answers short ! In most cases two or three sentences will be more than enough. If your answers are too long or contain obviously irrelevant information you may incur a penalty, i.e. brevity in your responses is strongly recommended. If you would like, you may work in small groups of 2-3 people to discuss the problem sets. However, you must write up answers individually. If you decide to work in a group, please list the names of the group members on your problem set. A note on academic integrity: As the syllabus clearly states, work that you hand in should be your own work: “A student shall not submit work […] that is not the result of the student’s own effort.” Please show your work for full credit on analytical questions, i.e., show the formulas, calculations (if appropriate). Do not report only the final answers for the essay questions. 1. In a faraway country, the total population is 1000 people (all of them non institutional civilian people), 564 are working and 36 are looking for a job. a. What is the size of the labor force? What are the participation rate and unemployment rate? In this economy, the labor productivity is 2. And the wage setting process is described by 𝑊 𝑃 𝑒 = 𝑍 − 200𝑢 where Z is the unemployment insurance provided by the government and u is the unemployment rate.
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