Question

1. some have suggested that its 4.1% rate of unemployment, the U.S. economy is at "full employment". in no more than five(5) lines of typed text beliw this question, describe and explain what this means. bes sure to provide a numerical analysis in your answer

2. consider the facts in the question immediately above. jim, a worker in a hypothetical economy just received a 3.2% pay raise from his employer. in no more than five(5) lines of typed text below this question, describe and fully explain the impact, if any, on jim.

Answer 1

Ans 1.

Expansion in us economy has employed many people and economist agree that economy is close to fullemployment. It doesn't means everyone has a job. The full employment means that unemployment has fallen to lowest possible level that won't cause inflation. Bureau of labour statistics shows that economy created 261,000 jobs in October 2017 and unemployment rate has fallen since Decemberer 2000.The number of unemployed has shrunk from 15 million in 2009 to 7 million in 2017.

Ans2.

Firms pay higher wages to worker in order to increase output. This increase in nominal wages encourage worker to supply more labour . Therefore unemployment falls. However it leads to increase in inflation because real wages don't increase.