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Unformatted text preview: Homework 9 Solutions ECON 010, Fall 2011 Question 1: National Labor Statistics The Bureau of Labor Statistics reported the following data for the second quarter of 2008: Labor force: 154,294,000 Employment: 146,089,000 Working-age population: 233,410,000 Calculate for that quarter the: a. Unemployment rate. Answer: The total number of unemployed people in this economy can be calculated by subtracting those employed from the labor force. Therefore, the number of people unemployed is 8,205,000. The unemployment rate can be calculated by dividing the number of people employed by the labor force. Therefore, the Unemployment rate is 5.32 percent. b. Labor force participation rate. Answer: The labor force participation rate can be calculated by diving the number of those in the labor force by the working age population. Therefore, the Labor force participation rate rate is 66.10 percent. c. Employment-to-population ratio. Answer: The employment to population ratio can be calculated by diving the number of those employed by the working age population. Therefore, the Labor force participation rate rate is 62.59 percent. 1 Question 2: National Labor Statistics Between 2004 and 2007, total US employment increased by 6.8 million workers, but the number of unemployed workers declined by only 1.1 million. How are these numbers consistent with each other? Answer: The fact that employment increased 6.8 million while unemployment declined 1.1 million is consistent with growth in the labor force of 5.7 million workers. The labor force constantly increases as the population grows and as labor-force participation increases, so the increase in the number of people employed may always exceed the reduction in the number unemployed. Question 3: National Labor Statistics Economists use labor-market data to evaluate how well an economy is using its most valuable resource - its people. Two closely watched statistics are the unemployment rate and the employment-to-population ratio. Explain what happens to each of these in the following scenarios. a. An auto company goes bankrupt and lays off its workers, who immediately start looking for new jobs. Answer: If an auto company goes bankrupt and its workers immediate begin looking for work, the unemployment rate will rise and the employment-population ratio will fall. b. After an unsuccessful search, some of the laid-off workers quit looking for new jobs. Answer: If some of the unemployed auto workers give up looking for a job, the unemployment rate will fall and the employment-population ratio will remain the same. c. Numerous students graduate from college but cannot find work. Answer: If numerous students graduate from college and cannot find work, the unemployment rate will rise and the employment-population ratio will remain unchanged....
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