31-33] The following table is the details for the population for age 16 or older
ID: 1117644 • Letter: 3
Question
31-33] The following table is the details for the population for age 16 or older. Refer to the table and answer the questions. Looking for job (having job) Cat Housewife Students Prisoners Hospital&Home; care Retired Others Total Total Not looking for job 700 500 900 600 50 60 100 1.250 2.960 200 (180) 100 (50 40 (18) 1,200 (1,100) 50 31. Suppose total population is 3,500, then how many are the age below 16? 32. Find the total labor force in this economy. 33. Find the unemployment rate of this economy 34. Suppose unemployment rate rises from 5% to 12%, then how much percent does GDP fall? If GDP at unemployment rate of 5% was $6.000 billion $, then what is the foregone GDP by the change in unemployment rate? (using Okun's law)Explanation / Answer
31) Population below the age of 16 are total population - population above 16 = 3500 - 2960 = 540
32) Labor force = those looking for (and are having) a job = 200 + 100 + 40 + 1200 = 1540
33) Unemployed people = (200 - 180) + (100 - 50) + (40 - 18) + (1200 - 1100) = 192.
Unemployment rate = unemployment / labor force = 192/1540 = 12.47%
34) Okun’s law is a rule that predicts a one-percent decline in output below its potential level, for a rise of 0.5 percent in the unemployment rate. When unemployment rate rises by 7%, real GDP will fall by 14%.
GDP was 6000 previously. Now GDP willl fall by 14% which is 6000 x 14% = 840. This is the foregone GDP
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