AK ECON 3610 Midterm Test Winter 2006 Answer Key

AK ECON 3610 Midterm Test Winter 2006 Answer Key - ECON...

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ECON 3610M: Winter 2006 MIDTERM Answers: MARKS IN BRACKETS ½ or 1 mark ( ✔) Question 1 a. UR = U/LF or (LF-E)/LF ( ½ ) = (17,425,100 – 16,295,600)/ 17,425,100 = 0.065 = 6.5% (½) (NOTE: AWARDED FULL MARK IF ANSWER CORRECT WITHOUT FORMULA STATED) ER = E/POP ( ½) = 16,295,600 / (17,425,100/0.671) (since LFPR = LF/POP) = 16,295,600 / 25,968,900 = 0.628 = 62.8% (½) b. Census of Population (½) - Shortcoming: Infrequent (every five years) (½) or not timely (data take a long time to be released) (½) Employment Insurance Data (½) - Imperfect match between EI recipients and number unemployed (i.e., some people who collect EI aren’t unemployed (e.g., new mothers) and some people who are unemployed aren’t eligible to collect EI) (½) c {2 of following answers) LFS population doesn’t include - people 14 years of age and under ( ) - people living on Native reserves ( ) - people living in Northern Territories (Yukon, Nunavut, Northwest Territories) ( ) - people in institutions (e.g., prisons) ( ) d. Financial commentators want to discuss strength (or weakness) in the labour market or economy. Hence, they want to know if there was a change in employment or unemployment due to some underlying strength rather than just changes that occur solely due to predictable seasonal affects. ( ) e. People who give up searching for work are excluded from the Labour Force. Lumping these people into the Not in the Labour Force group reduces the measured unemployment rate. So, if people give up search because they think job prospects are so grim, the official UR understates the weakness in the labour market ( ) f In Canada, people 15 years and over are surveyed, in the US, people 16 years and over are surveyed ( ) OR - Job Search: In US, passive searchers (those only looking at job ads) are considered Not In the Labour Force, whereas in Canada, they are considered unemployed ( )
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Question 2a and b {Note, -1 if utility curves cross} Income ($/day) Leisure (Hrs/Day) 14 10 T
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