Use the table to answer the following questions: According to the table, the num

Question

Use the table to answer the following questions:

According to the table, the number of people NOT in the labor force is equal to

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Question 130.2 pts

Which of the following equations represents the labor force?

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Question 140.2 pts

The Great Recession was most similar to which of the following downturns?

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Question 150.2 pts

The difference between the official unemployment rate and the alternate measure of unemployment that includes discouraged workers and underemployed workers

Explanation / Answer

1. The labour force consists of people willing to work, that is, total number of people who are employed as well as the total number of people who are unemployed.

Therefore Labour force = Employed + unemployed

= 138 + 9 = 147 million.

Therefore total number of people not in labour force =

= Total population - Number of people in Labour force

= 215 - 147

= 68 million which is the second option.

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130. Labour force is the number of people who are willing to work. That consists of Unemployed people as well as employed people.

Therefore Labour force = unemployed + employed which is the 4th option.

(note: The second option which is (labour force/ relavant population)*100 is the labour participation rate and not labour force)

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140. Comparing inflation rates, unemployement rates and fall in GDP ( as a measure of downturn), the Great Recession was most similar to the 1982 recession.

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150. The difference between the official unemployment rate and the alternate measure of unemployment that includes discouraged workers and underemployed workers grows when the economy enters a recession (answer is fifth option).

The official unemployment rate is defined as the ratio of unemployed people to the labour force, that is:

Unemployment rate = Unemployed rate / labour force

Therefore it only counts those people who are unemployed but still looking for work. However when economy is in recession, expectations are low and jobs are very hard to find. Because firms are producing less, hence they are also hiring people less. Therefore there are lot of discouraged workers who are no longer searching for work because they believe there are no jobs available.

Therefore discouraged workers are not accounted as unemployed while calculating the official unemployement rate. Since in recession more and more people believe that jobs are not available and stop looking for them, the difference between official unemployement rate and the alternative measure of unemployement grows. Hence 5th option is correct.

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