3. (10 points) Suppose the civilian non-institutionalized population equals 400

Question

3. (10 points) Suppose the civilian non-institutionalized population equals 400 million people; the number of officially classified unemployed persons equals 40 million; the number of people working in construction is 12 million; the number of officially classified employed persons equals 210 million people, the number of discouraged workers is 20 million people; the number of stay at home spouses is 100 million people; the number of underemployed workers is 12 million people; the number of phantom unemployed persons is 8 million people; and the number of structural unemployed workers is 10 million. (a) Based on this information, calculate the official unemployment rate to the second decimal place (hundredths place). Please show how you got your answer - meaning show your work. Remember to state your answer as a percent (including the percent symbol, since without the percent symbol, your answer becomes meaningless). (b) In one factual sentence (without any opinion of whether you think your answer is high or low), please clearly explain what information your unemployment rate answer in (a) above tells us. ( am not asking if the number seems high or low. I am asking what factual information that number tells us. Whether someone thinks that number is high or low is just an opinion.) (c) Now if the number of discouraged workers were reclassified as officially unemployed persons, how would this change the reported unemployment rate? Again make sure that your unemployment rate number is reported to the second decimal place (hundredths place). Again, please show your work and present your answer as a percent. (d) Based on your answers for (a) and (c) above, would you say that by the Bureau of Labor Statistics not counting discouraged workers as unemployed persons, that the reported unemployment rate tends to underestimate or overestimate the unemployment situation in the country? In your explanation, you must support your answer with your numbers from your answers for (a) and (c) above.

Explanation / Answer

Answer)

a. Civilian non- institutional population refers to those people in United States who are 16 years and older and are not in any active duty of Armed forces. Another term which I want to explain is of Phantom unemployed persons who are claiming to be unemployed so that they can receive unemployment benefits from the government. Phanto unemployment rate can result into false recession as it inflates the unemployed people lowering inflation rate.

Now, the official unemployment rate is defined as the number of unemployed persons divided by total labour force. The total labour force is number of unemployed plus employed persons.

Household spouses, students , discouraged workers and phantom unemployed people are dropped out of labour force.

Hence, the total labour force = 40 + 210 = 250 million people. Given the total unemployed people = 40 million.

Unemployment rate = 40 /250 = 0.16 multiplied by 100 = 16 %.

b. The unemployment rate in the countryis 16 % which means there exists high inflation rate.

c. If the number of discouraged persons are reclassified as unemployed persons , so number of unemployed persons increases by 20 million. The new number of unemployed persons = 40 + 20 = 60 million

Hence new unemployed rate = 60 / 250 = 0.24 multiplied by 100 = 24% .

So, unemployment rate has increased by 8 % .

d. If the Labor Bureau is not counting the discouraged workers in the unemployed persons so the reported unemployment rate tends to be underestimated. The discouraged workers are those who are finding job at reservation wage rate but could not find work. So, they should be counted by the Labor Bureau in the total number of unemployed persons so to attain the actual unemployment rate.

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.