Homework2_answer

Homework2_answer - Econ 352 Intermediate Economics YiLi...

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

View Full Document Right Arrow Icon
Econ 352 YiLi Chien Intermediate Economics Spring 2011 Homework Assignment 2 Answer Question 1: Unemployment Rate (20 pts) What is the definition of unemployment rate? List the cause of frictional unemployment and structural unemployment respectively. Answer: The definition of unemployment rate is the number of unemployment workers divided by the total labor force. The frictional unemployment is caused by the time to search for a job The structural unemployment is caused by wage rigidity which might result from minimum wage law, labor unions or efficiency wage. Question 2: Growth Rates (20 pts) If real GDP grows at 2% a year, how many years does it take for GDP to double? What is the general formula for the doubling of a time series that grows at a percent a year? Answer: In the general case, we are interested in the solution to k in the equation (1 ) 2 k a += where a is the growth rate. Take log of the equation ln 2 ln(1 ) k a = + If we plug .02 a = into this formula, the result is 35.002. Thus it takes around 35 years to double output
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Homework2_answer - Econ 352 Intermediate Economics YiLi...

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

View Full Document Right Arrow Icon
Ask a homework question - tutors are online