The US civilian unemployment rate (based on UNRATE) – the one most often quoted

Question

The US civilian unemployment rate (based on UNRATE) – the one most often quoted is currently at ________%.

Suppose that the # of Employed = 160 million, # of Unemployed = 10 million, and the Adult Civilian Population = 240 million. In this case the labor force participation rate equals ______(# in %) and the Employment to Adult Civilian Population ratio equals _______ (# in %).

Suppose that the net government income = $350 billion and the Government Expenditure (G) equals $500 billion. In this case, government savings is positive/negative (circle best answer), and is hence the government budget is equal to ______________.

The output gap is ________________ when actual output is above the full potential level of output. In this case actual unemployment is _________________ the natural rate of unemployment.

The two main sources of economic growth are ______________ growth and growth in ______________________.

Explanation / Answer

(1) Current US civilian unemployment rate = 3.9% (As on August 2018, latest available data)

(Source: FRED Economic Research website)

(2)

Labor force (million) = Number employed + Number unemployed = 160 + 10 = 170

(i) Labor force participation rate = Labor force / Adult population = (170/240) x 100 = 70.83%

(ii) Employment-to Adult population = Number employed / Adult population = (160/240) x 100 = 66.67%

(3)

(i) Government savings is Negative (Since Income < Expenditure).

(ii) Government budget ($Billion) = Government income - Government expenditure = 350 - 500 = - 150

(4)

Output gap is positive when actual output is above the full potential level. In this case actual unemployment is lower than natural rate of unemployment.

NOTE: As per Answering Policy, first 4 questions have been answered.

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