Question

Consider the following information for the US labor market in 2010. The population (civilian, aged 16 and over) was 237 million. The labor force was 153 million and it is split between 138 million employed and 15 million unemployed individuals.

Suppose that the number of unemployed falls by 3 million because these workers become employed. Nothing else changes. Answer the following questions. Pick the closest answer.

What is the new unemployment rate (in percent)? Is it higher or lower than before? Is the labor market in better or worse shape? *

UR=63.4%. So a lower unemployment rate. The labor market is in better shape because more people are employed.

UR=13.3%. So a higher unemployment rate. The labor market is in worse shape because fewer people are employed.

UR=7.8%. So a lower unemployment rate. The labor market is in better shape because more people are employed.

UR=15.8. So a higher unemployment rate. The labor market is in worse shape because more people are employed.

What is the new EPR (employment to population ratio) (in percent)? Is it higher or lower than before? *

EPR= 7.8%. Higher than before because some previously unemployed have found jobs.

EPR= 7.8%. Lower than before because some previously employed have lost jobs.

EPR= 59.5%. Higher than before because some previously unemployed have found jobs.

EPR= 63.3%. Higher than before because some previously unemployed have found jobs.

Go back to the baseline data. Suppose that the number of unemployed falls by 3 million because these workers get discouraged and stop seeking employment. Nothing else changes. Pick the closest answer.

What is the new unemployment rate (in percent)? Is it higher or lower than before? Is the labor market in better or worse shape? *

UR= 8%. Lower unemployment rate, but the labor market is in worse shape because of the long-running recession.

UR= 10.5%. Higher unemployment rate and the labor market is in worse shape because of the long-running recession.

UR= 5.7%. Lower unemployment rate, but the labor market is in better shape because of the long-running recession.

UR= 12.5%. Lower unemployment rate, but the labor market is in worse shape because of the long-running recession.

What is the new employment to population rate (in percent)? Is it higher or lower than before? *

EPR= 66.1%. Higher than in the baseline.

EPR= 58.2%. Same as in the baseline.

EPR= 38.7%. Lower than in the baseline.

EPR= 66.1%. Lower than in the baseline.

Answer 1

1) The answer is UR=7.8%. So a lower unemployment rate. The labor market is in better shape because more people are employed.

because unemployment rate = no. of unemployed people / labor force ) *100

UR = 12 / 153 ) *100 = 7.8%

2) The answer is  EPR= 59.5%. Higher than before because some previously unemployed have found jobs.

employment to population ratio = employed / adult populaiton .

EPR = 141 / 237 = 0.5949 *100 = 59.4%

3) The answer is UR= 8%. Lower unemployment rate, but the labor market is in worse shape because of the long-running recession.

UR = 12 / 150 ) *100 = 8%

4) The answer is EPR= 58.2%. Same as in the baseline.