5. Determine whether each of the following statements is true or false. Briefly

Question

5. Determine whether each of the following statements is true or false. Briefly explain why. Note:
Apply the economic definition of unemployed.
a) Some people who are officially unemployed are not in the labor force.
b) Some people in the labor force are not working.
c) Everyone who is not unemployed is in the labor force.
d) Some people who are not working are not unemployed.

6. 11. The consumer bundle contains 20 gallons of fuel, a standard meal at a restaurant, a month of cell phone service.
  price                                      Quantity  
                        2010 2011                    2010         2011
Fuel/ gallon 2.50 2.25 Fuel [gallon           11 400 12100
Standard meal 15.50 18.00 Standard meal           550          525
Cell Service/ month     59.80 70.15 Cell Service / month    950          900
a) Calculate the cost of the consumer bundle in both 2010 and 2011.
b) What is the inflation rate from 2010 to 2011?
c) Compute the nominal GDP for each year.
d) By what percentage did nominal GDP increase between Year 1 and Year 2?
e) Now compute real GDP in Year 2 by using Year 1 prices.
f) By what percentage did real GDP increase between Year 1 and Year 2?

Explanation / Answer

5) a) False, here people are not actively looking for a job, hence they cannot be unemployed.
b) True, this is unemployment as they are in the labor force but unable to find work.
c) False, because some people might choose not to work and some people could not be looking for work, so everyone who is not working is not unemployed.
d) True, some people may be unemployed, but some people who choose not to work are not unemployed. A person must be looking for a job to be unemployed.

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