Question

macroeconomic information for the economy of anchovy is given below year 1 year 2 output 6500 8000 employment 500 700 unemployment 55 70 labor force 555 770 price per pizza $4 6 a. what was the growth rate of average labor productivity in anchovy between year 1 and year 2? b. what was the inflation rate in anchovy between year 1 and year 2? c. what was the unemployment rate in year 1? in year 2?

Answer 1

a) Average Productivity of labour in year 1= Total output/ Total employed = 6500/500 = 13

Average Productivity of labour in year 2= Total output/ Total employed = 8000/700 = 11.43

Growth in average Productivity of labour between year 1 and year 2= (11.43-13)/13 = -12.1%

b) Inflation rate measures the percentage increase in the price. So rate of inflation between year 1 and year 2 is = (6-4)/4 = 50%

c) Unemployment rate in year 1 = Total unemployed in year 1/ labor force in year1= (55/555)*100=9.9%

Unemployment rate in year 2 = Total unemployed in year 2/labor force in year 2 = (70/770)*100= 9.1%