Question

(1) The current unemployment rate is 5.2% and the number of people in the labour force is 212,000. Use this information to find the following.

i. Tara, who lives in Sydney is not a particularly productive worker and she is often unemployed as she gets sacked from her various jobs as she fails to meet her employer’s expectations. Yet for the past 8 months, Tara has not only managed to obtain a job on a part-time basis, but recently was upgraded to a full-time worker despite still being a less than efficient employee. What does Tara’s situation tell you about Australia’s output gap at present, and what does this indicate with respect to the relationship between the actual unemployment rate and the full-employment rate?

(2). In the country of Hypothetica, we have the following information for the year 2015:

*Consumption totalled $2 billion, but 25% of this total consisted of goods which were initially sold in 2014.

*A total of $250 million worth of new housing stock was sold.

*Labour wage income was $150 million.  

*Businesses invested $100 million dollars in new capital (i.e. machinery) stock.

*Businesses also bought $200 million dollars worth of company shares on the stock exchange.

*Foreigners with working visas living in foreign-only households bought $100 million worth of locally made goods and services.

*The government spent $500 million building roads.

*Hypothetica is a closed economy, thus they are no exports and imports.

1. Calculate and explain how you obtained the figure (i.e. what did you count, and what did you exclude) for Hypothetica’s consumption in 2015                
2. Calculate and explain how you obtained the figure (i.e. what did you count, and what did you exclude) for Hypothetica’s investment in 2015     
3. What was Hypothetica’s GDP in 2015 using the expenditure method? Explain your answer

Answer 1