This preview shows pages 1–2. Sign up to view the full content.
1)
(TCO F) The size of the labor force in a community is 800, and 720 of these folks are gainfully
employed. In this community, 200 people over the age of 16 do not have a job and are not
looking for work. In addition, 100 people in the community are under the age of 16. The
unemployment rate is ______.
The unemployment rate is calculated by dividing the number of unemployed by the labor force.
The labor force is calculated by subtracting three things from the population (# under 16, # of
institutionalized adults, and # not looking for work). In this example,
you are given the size of
the labor force (800)
, and you are also told that 720 are employed. Therefore, 80 are
unemployed, and the unemployment rate is simply 80/800 or 10%.
2)
(TCO F) Suppose
nominal GDP
in 2005 was $12 trillion, and in 2006 it was $15 trillion. The
general price index in 2005 was 100, and in 2006 it was 102. Between 2005 and 2006,
real GDP
rose by what percent?
You need to make use of the inflation formula for the GDP deflator here and compare results
between the two years.
For 2005:
100 = [$12 T / Real GDP] x 100
So, Real GDP must equal $12 T. You could also recognize that Real GDP and nominal GDP are
the same in the base year.
For 2006:
102 = [$15 T / Real GDP] x 100
1.02 = [$15 T / Real GDP]
Real GDP = $15 T / 1.02
So, Real GDP must equal $14.706 T.
The percentage increase in Real GDP will then be [(14.706  12) / 12] x 100 = (2.706 / 12) x 100
= 22.55%
Therefore Real GDP increases by 22.55% between 2005 and 2006.
3)
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.
 Summer '11
 gotches
 Economics

Click to edit the document details