Question

a. What are the problems with unemployment and the way the government measures it? In real...

a. What are the problems with unemployment and the way the government measures it? In real life, is the unemployment rate higher or lower than the government's rate?

b. In 1979, gas prices were $1.00; in 2016 they were $2.30. Are nominal prices or real prices higher today than in the past? How do you know? Use the CPI of 85 in 1979 and 240 in 2016. Show your work.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a) Unemployment Rate = (Number of Unemployed / Labor Force) * 100

This is the official U3 unemployment rate calculation.

Labor Force includes employed and unemployed.

Unemployed are persons who have actively looked for work in the past 4 weeks.

Unemployed does not include the marginally attached and discouraged workers. This is the major flaw in the official unemployment rate. If this category is included, then the unemployment rate will be much higher

b) Nominal prices or market basket is current price times current quantity. This does not provide for inflation. The nominal prices in 2016 is higher than in 1979.

Real prices adjusts for inflation. CPI in 1979 is 85 and in 2016 it is 240. The inflation in 2016=

(Current year CPI-Prior year CPi)/Prior year CPI= (240-85)/85=155/85=182.35%

Real prices are higher in 2016 as the inflation rate is 182.35%.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Which of the following is not typically a government objective? a. Low unemployment b. Fast...
1. Which of the following is not typically a government objective? a. Low unemployment b. Fast economic growth c. Stable prices d. Greater regional income inequality 2. Which of the following is not an example of fiscal policy? a. Higher interest rates b. Lower income tax c. Higher corporation tax d. Greater government spending 3. The government's budget position measures the difference between: a. Export spending and import spending b. Government spending and income c. Government consumption and investment d....
Chapter 7 Problems 1.)   Other than not working what are some social problems associated with unemployment?...
Chapter 7 Problems 1.)   Other than not working what are some social problems associated with unemployment? 2.)   How is the unemployment rate calculated? 3.)   Describe the Labor Force. How is it calculated? List one demographic group that the labor force participation rate has increased for and one demographic group that it has decreased for over the years in the U.S. 4.)   Why is the unemployment rate understated? Provide at least three reasons. 5.)   List and describe at least four sources...
Structural unemployment occurs in an economy due to: a. business cycles. b. the time required by...
Structural unemployment occurs in an economy due to: a. business cycles. b. the time required by employers and job seekers to explore the job market. c. changes in tastes, technology, and taxes that reduce the demand for certain skills. d. seasonal decreases in the demand for labor. Which of the following suggests that there has been inflation in an economy since the base year? a. The GDP price index in the base year is equal to zero. b. The GDP...
1. To determine the unemployment rate, each month the government collects data from a survey of...
1. To determine the unemployment rate, each month the government collects data from a survey of about 60,000 households nationwide. collects data from a survey of about 500,000 firms nationwide. conducts a full count of the number of unemployed in each state. records the number of people receiving unemployment compensation. 2. Which of the following best describes the interest rate effect? As the price level rises, less money is demanded, so consumption spending must fall to maintain equality of investment...
The hypothetical information in the following table shows what the values for real GDP and the...
The hypothetical information in the following table shows what the values for real GDP and the price level will be in 2015 if the government does not use fiscal policy : Year Potential GDP Real GDP Price Level 2014 $1.50 trillion $1.50 trillion 110.0 2015 $1.54 trillion $1.50 trillion 111.5 If Parliament wants to keep real GDP at its potential level in 2015, should it use an expansionary policy or a contractionary policy? Explain whether the government should be increasing...
1. Economists in Olliestan estimate the natural rate of unemployment is 7 percent. The table below...
1. Economists in Olliestan estimate the natural rate of unemployment is 7 percent. The table below lists unemployment rates from the Labour Force Survey for selected months. Month Structural Seasonal Frictional Cyclical March 3% 1% 2% 5% April 3% 2% 3% 3% May 3% 1% 1% 4% 2. During which months did Olliestan have a recessionary gap? A) March, April and May B) March and April, but not May C) April and May, not March D) Only March E) Only...
1. CPI inflation overstates increases in the cost of living A. but its impact on government...
1. CPI inflation overstates increases in the cost of living A. but its impact on government budget is insignificant as both taxes and expenditures are tied to the index. B. because the index is subject to substitution bias but not quality bias. C. because the index is subject to quality bias but not substitution bias. D. by​ 1% per​ year, or perhaps even higher. 2. The CPI is calculated as A. The current cost of a fixed market basket of...
1. Economic growth can be measured by: a) The CPI b) The CBI c) GDP d)...
1. Economic growth can be measured by: a) The CPI b) The CBI c) GDP d) MPC 2. In a boom: a) Unemployment is likely to fall b) Prices are likely to fall c) Demand is likely to fall d) Imports are likely to fall 3. As a measure of economic welfare, gross domestic product underestimates a country’s production of goods and services when there is an increase in: a. The production of military goods b. The production of antipollution...
1. Which of the following is true of unemployment? A) It is defined as the number...
1. Which of the following is true of unemployment? A) It is defined as the number of people actively looking for work who do not have jobs. B) The result is that the economy operates inside its production possibilities curve. C) There are psychological consequences associated with unemployment. D) All of the above. 2. Which of the following people would be considered unemployed? A) Homer, who lost his job at the power plant and is not looking for work B)...
If we were to add up the value of output of all production of goods and...
If we were to add up the value of output of all production of goods and services in the economy, we would: obtain GDP at factor cost. obtain GDP at market prices. obtain GDP using the income method. overestimate the value of production taking place in the economy. underestimate the value of production taking place in the economy. The               demand for money arises out of the need to hold money as a medium of exchange. This demand for money is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT