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# Government regulation of pollution and price levels

5: The Bureau of Labor Statistics reported that in December 2002, the total labor force was 142,542,000 of a possible 214,967,000 working-age adults. The total number of unemployed people was 8,590,000. From this information, explain how to calculate the following and calculate the rates for December 2002:
5a: Labor force participation rate
5b: Unemployment Rate
5c: Employment Rate

10: Supply/demand analysis states that equilibrium occurs where quantity supplied equals quantity demanded, but in U.S. agricultural markets quantity supplied almost always exceeds quantity demanded. How can this be?

11: The government establishes rights to pollute. Without a pollution permit, you aren't allowed to emit pollutants into the air, water, or soil. Firms are allowed to buy and sell these rights. In what way will this correct for an externality?

15: What would happen to the U.S. trade deficit and to the U.S. exchange rate if Japan ran an expansionary monetary policy?

16: How does personal income differ from national income?

#### Solution Preview

5: The Bureau of Labor Statistics reported that in December 2002, the total labor force was 142,542,000 of a possible 214,967,000 working-age adults. The total number of unemployed people was 8,590,000. From this information, explain how to calculate the following and calculate the rates for December 2002:
5a: Labor force participation rate is the number of people actively employed or seeking employment out of the total working-age population. People not counted include students, retired people, stay-at-home parents, people in prisons or similar institutions, as well as discouraged workers who simply do not want work. For this problem you would add the unemployed and employed together to get your labor force. Therefore you have 151,132,000 out of 214,967,000 which is 70.3 percent.
5b: Unemployment rate is the number of people who would choose to work if they could out of the total labor force. The labor force is the working and unemployed taken together; it does not include those who could work, but don't want to. Therefore we have ...

#### Solution Summary

Supply/demand analysis, pollution permits, labor force participation, and US trade deficit issues.

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