Explore BrainMass

Answers to 4 Exam Questions about Unemployment & Inflation

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

1. Assume the following data for a country: total population, 500; population under 16 years of age or institutionalized, 120; not in labor force, 140; unemployed, 36; part-time workers looking for full-time jobs, 10. What is the size if the labor force? What is the official unemployment rate?

2. Suppose that the natural rate of unemployment is particular year is 5 percent and the actual rate of unemployment is 13 percent. Use Okun's law to determine the size of the GDP gap in percentage-point terms. If the potential GDP is $500 billion in that year, how much output in being forgone because of cyclical unemployment.

3. If the CPI was 120 last year and is 138 this year, what is the year's rate of inflation? In contrast, suppose that the CPI was 120 last year and is 116 this year. What is this year's rate of inflation? What term do economists use to describe this second outcome?

4. If your nominal income rose by 5.3 percent and the price level rose by 3.8 percent in some year, by what percentage would your real income (approximately) increase? If your nominal income rose by 2.8 percent and your real income rose by 1.1 percent in some year, what must have been the (approximate) rate of inflation?

© BrainMass Inc. brainmass.com October 17, 2018, 4:01 am ad1c9bdddf

Solution Preview

Labor force = 500 - 120 - 140 = 240
Unemployment rate = 36/240 = 0.15 = 15%

Okun's law states that for every 1% increase in the unemployment rate, GDP will be ...

Solution Summary

This solution gives detailed calculations to answer 4 common questions found on Macroeconomics exams. The topics covered are:

1. Labor force & unemployment rate
2. Okun's law
3. CPI & inflation
4. Nominal vs Real income

Similar Posting

Macroeconomics Test Preparation 4

I'm requesting assistance with the below questions in order to prepare for an exam. The course is "Macroeconomics" author: Robert J. Gordon 11th edition text.
I'd appreciate any assistance with these questions?

23) As an individual, you cannot participate in the financial markets to issue new stock or sell new bonds because

a) it is too costly for individual savers to research your credit worthiness
b) your good reputation is insufficient to convince savers
c) you have a bad reputation
d) Your bank has foreclosed on your automobile loan


26) Which of the following was not part of the financial deregulation of the 1970â??s and 1980â??s?

a) banks could issue checkbooks for savings accounts
b) banks could pay interest on checking accounts
c) institutions other than banks could offer money-market mutual funds, from which checks could be written
d) All of the above were part of the deregulation

27) the quantity equation makes the demand for money depend on

a) the inflation rate and the unemployment rate
b) the unemployment rate and the level of interest rates
c) interest rates and the unemployment rate
d) none of these

View Full Posting Details