6) Assume you live in an economy that has a population of 2,000,000 people over

Question

6) Assume you live in an economy that has a population of 2,000,000 people over the age of 16. The labor force in your economy is 1,200,000 people and 1,000,000 people are currently working. a. Calculate the unemployment rate b. Calculate the labor force participation rate 7) From the information in the table below, calculate the following statistics. S1,344 456 376 480 1520 24 Investment Interest Employee compensation Net exports Rents Depreciation Net foreign factor income 278 a. Gross domestic product b. Gross national product c. Net domestic product d. Profit

Explanation / Answer

6) Labor force is 1,200,000 and unemployment = 1,200,000 - 1,000,000 = 200,000. Unemployment rate = 200,000*100/1,200,000 = 16.67%

LFPR = LF/population over 16 years = 1,200,000*100/2,000,000 = 60%

7) GDP = Consumption + Investment + Government purchases + Net exports = 1344 + 456 + 480 + 24 = 2304

Gross national product = GDP + Net factor income abroad = 2304 + 5 = 2309

NDP = GDP - depreciation = 2304 - 278 = 2026

Profit = GDP - Employee compensation - rent - interest = 2304 - 1520 - 2 - 376 = 406

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