PART ONE (15 points) Consider an economy that has 100,000 people who are 16 year
ID: 1125824 • Letter: P
Question
PART ONE (15 points) Consider an economy that has 100,000 people who are 16 years old or older. Of this group, 2,000 are currently in the military, 1,000 are homemakers, 10,000 are retired, and 14,000 are full-time students who are not employed. Further 10,000 are currently not working and are actively seeking jobs, 5,000 are temporarily laid off and anticipate that their jobs will resume within the next two months, and 5,000 people are currently not working and are not actively seeking jobs because they live in a community with a severely depressed economy grou All other adults in this economy can be assumed to be working: in this p, 80% are fully employed and 20% are underemployed a) What is the civilian labor force in this economy? (2 points) b) What is the number of unemployed people in this economy? (2 points) c) What is the number of employed people in this economy? (2 points) d) Calculate the unemployment rate. (2 points) e) Calculate the civilian labor force participation rate. (2 points) f) The government of this economy is considering changing its definition of unemployed so that it includes discouraged workers. If this new policy is implemented, what will the new unemployment rate equal? (2.5 points) Suppose the government changes its classification of discouraged workers and, in addition, decides to treat underemployed workers as unemployed workers since this group is not fully utilizing their labor resources. If both of these p to the unemployment rate? (2.5 points) g) olicy chang es are implemented, what will happenExplanation / Answer
(a)
Calculate the civilian labor force -
Civilian labor force = Total population - Persons in military - Homemakers - Retired - Full-time students - Discouraged workers
Civilian labor force = 100,000 - 2,000 - 1,000 - 10,000 - 14,000 - 5,000 = 68,000
The civilian labor force in this economy is 68,000 people.
(b)
Calculate the number of unemployed people in this economy -
Number of unemployed = Not working but seeking job + Temporarily laid off and waiting
Number of unemployed = 10,000 + 5,000 = 15,000
The number of unemployed people in this economy is 15,000.
(c)
Calculate the number of employed people in this economy -
Number of employed = Civilian labor force - Unemployed people
Number of employed = 68,000 - 15,000 = 53,000
The number of employed in this economy is 53,000 people.
(d)
Calculate the unemployment rate -
Unemployment rate = [Number of unemployed/Civilian labor force] * 100
Unemployment rate = [15,000/68,000] * 100 = 22.05%
The unemployment rate is 22.05%.
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