Mid2ReviewCh6-11withAnswersSp09 (1)

# Mid2ReviewCh6-11withAnswersSp09 (1) - 1 ECN 211 Review...

This preview shows pages 1–2. Sign up to view the full content.

ECN 211 Review Sheet for Midterm 2 Fall Semester, 2008 Chapters 6-11 1. What adjustments must be made to the production possibilities schedule to reflect the fact that, in a market economy, resource owners might not be willing to commit all of the resources they own to the production process in any given year? (Answer: The “physical” production possibilities schedule reflections combinations of X and Y that can be produced if every resource the economy has is used, and most efficiently, in the production of goods and services during the year. The “Institutional” production possibilities schedule lies inside the “physical” production possibilities schedule and reflects the fact that some resource owners may not wish to commit the resources they own or control to the production process during the year. Full time college students who do not work, retirees and stay-at-home moms are examples of individuals who have productive resources but who choose not to use them in market production during a given year. The higher is the labor force participation rate, the close are the “Institutional” and “Physical” production possibilities schedules.) 2. Calculate the value of the civilian unemployment rate (from data given). Non-institutional population aged 16 years or more ……1000 Armed Forces employment………………………………… 200 Civilian employed…………………………………. .………. . 400 Civilian unemployed………………………………………….200 (Answer: The civilian unemployment rate is the percentage of the current labor force (E + U) that is unemployed. (U). In this case U /(U + E) = 200 / 600 = 33%.) 3. Calculate the labor force participation rate (from data given). (Answer: In the problem above the potential civilian labor force is 800 and the actual civilian labor force is 600. The labor force participation rate is the percentage of the potential civilian labor force (800) that is currently in the labor force (400 + 200) so the rate is 600/800 = 75%.) 4. What are the basic categories of unemployment? Which of these will be emphasized in this course? (Answer: The basic categories are frictional, structural, seasonal and cyclical unemployment. Cyclical unemployment is emphasized in this course.) 5. What does a 6% unemployment rate mean? (Answer: A 6% unemployment rate means that 6% of the current or actual labor force is unemployed. It does NOT mean that 6% of all workers are unemployed 6% of the time.) 6. What is meant by “full” employment for the macroeconomic policy purposes? Does “full” employment mean a zero unemployment rate? Explain your answer. (Answer: For macroeconomic policy purposes, “full” employment exists when there no cyclical unemployment. At “full” employment we are still likely to have frictional, structural and some seasonal

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 9

Mid2ReviewCh6-11withAnswersSp09 (1) - 1 ECN 211 Review...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online