econ exam 2

# Which of the following people is counted in the labor

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12. Which of the following people is counted in the labor force? VB # 11 and VC # 3 a. Chou, who lost his job and last looked for work three months ago. Stephanie, who hold an MBA in management but can only find part- time employment at a fast-food restaurant which she does not accept . c. Jordan, who would like to work as a stockbroker but is now a househusband. d. Steffan, who thinks could easily become a millionaire, despite the opinion of the psychiatrist at the state hospital where he is a patient. e. Monique, age 90, who is enjoying her retirement in Montana. 13. An economy consists of 500 people, 40% of which are in the labor force and 9 people are without jobs and are actively looking for one each. The unemployment rate of this economy is VB # 12 and VC # 4 Forty percent is in the labor-force, therefore 40% of 500 equals 200 which is the total labor-force size. Out of 200 qualified workers 9 are without job, therefore, out of every 100, 4.5 are without job–unemployment rate is 4.5%. If you want to go by the formula, you can do so. Here N t = 200 and N u = 9 UR = ( N u N t ) × 100 = ( 9 200 ) × 100 = 4 . 5% . 14. Using our definition of GDP price-deﬂator (i.e., ignoring the multiplier 100), the GDP price-deﬂator for the current year is 1.40. Mr. Shopper bought a car for \$14700, assuming uniform price increase for all goods and services, the value of this car would have been \$ in the base year. VB # 13 and VC # 5 Given information, P = 1 . 4, current value which is GDP and is equal to \$14700. What is the base period’s value which is nothing but RGDP. 4

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P = GDP RGDP 1 . 4 1 = 14700 RGDP Cross multiply 1 . 4 RGDP =14770 RGDP = 14700 1 . 4 = \$10 , 500 . 15. One can conclude that there has been price inﬂation since the base year 2000 if the GDP price-deﬂator in the current year is VB # 14 and VC # 6 16. A firm hires labor for \$8 , 000, pays rent of \$4 , 000, buys raw materials for \$13 , 000, earns profits of \$1 , 200, and sells its output for \$31 , 000, the firm’s value added GDP contribution is VB # 22 and VC # 11 a. \$4 , 800. b. \$10 , 000. c. \$32 , 200. d. \$26 , 200. none of the above . Value added GDP is the difference between sell value and purchase of raw material. Here sell value is \$31,000 and purchase of raw materials is \$13,000. Therefore, value added GDP equals 31000-13000=\$18,000.
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