Share
Explore BrainMass

Composition of the labor force

Can someone assist with these questions? I want to double check myself before turning them in. The book in which I am using is: Principle of Macroeconomics (5th ed.) by Taylor, John B. Copyright 2007, published by Houghton Mifflin Co. I have to write a short narrative about the question and looking to validate my answers.

1.Why is it difficult to determine who is and who is not in the labor force? What consequence does this have, if any, for the labor market indicator?

2.Interpret "Creative Destruction"

Should policymakers worry more about structural unemployment or frictional unemployment?

3.(A)Does the Federal Reserve have complete control over the money supply at all times? Why or why not?
(B) What is the difference between the monetary base and the money supply?

4.
Part I
How does the money multiplier differ when currency holdings are zero, compared to when currency holdings are greater than zero?

Part II
If the currency-to-deposit ratio increases, what effect, if any, does this have on the monetary base, the money supply, total deposits, and economic growth?

Solution Preview

1.
The main problem with determining the size of the labor force is discouraged workers. These are people who want jobs, but have found the process of looking for them so depressing that they have given up. They ranks swell when the economy slows, because wages fall and fewer jobs are available. So, unemployment rates seem lower than they should be. Also, employers tend to increase the number of hours current employees are working before they hire new ones. So, unemployment tends to increase for 2 or 3 quarters after the economy starts to improve. Likewise they will decrease the number of hours being worked before laying anyone off. Unemployment surveys do not ask what wage the job hunters are seeking. Often jobs may be available, but they aren't ...

Solution Summary

Types of unemployment, determination of who is in the labor force, and economic policy.

$2.19