# Week 6 Quiz

Only available on StudyMode
• Published : April 14, 2013

Text Preview
Grade Details - All Questions
1.Question :
(TCO F) The size of the labor force in a community is 500, and 400 of these folks are gainfully employed. In this community, 100 people over the age of 16 do not have a job and are not looking for work. In addition, 200 people in the community are under the age of 16. The unemployment rate is ______.

Student Answer: 500 total -400 working = 100 not working. 100/500= 1/5 = 20% unemployment rate of people 16 or over. Instructor Explanation:The unemployment rate is calculated by dividing the number of unemployed by the labor force. The labor force is calculated by subtracting three things from the population (# under 16, # of institutionalized adults, and # not looking for work). In this example, you are given the size of the labor force (500), and you are also told that 400 are employed. Therefore, 100 are unemployed, and the unemployment rate is simply 100/500 or 20%.

Points Received: 15 of 15

2.Question :
TCO F) Suppose nominal GDP in 2005 was \$11 trillion, and in 2006 it was \$14 trillion. The general price index in 2005 was 100, and in 2006 it was 102. Between 2005 and 2006, real GDP rose by what percent?

Student Answer: 2005 GDP= 11 AND 2005 GPI = 100 2006 GDP= 14 AND 2006 GPI = 102 IN 05' 11 Trillion/100= 0.11 x 100= 11 IN 06' 14 Trillion/102= 0.1372 x 100= 13.73 [(13.73-11)/11]x 100 =(2.73/11)x100 =0.248181 x 100 =24.82% percentage the real GDP rose Instructor Explanation:You need to make use of the inflation formula for the GDP deflator here and compare results between the two years.

For 2005:
100 = [\$11 T / Real GDP] x 100
So, Real GDP must equal \$11 T. You could also recognize that Real GDP and nominal GDP are the same in the base year.

For 2006:
102 = [\$14 T / Real GDP] x 100
1.02 = [\$14 T / Real GDP]
Real GDP = \$14 T / 1.02
So, Real GDP must equal \$13.725 T.

The percentage increase in Real GDP will then be [(13.725 - 11) / 11] x 100 = (2.725 / 11) x 100 = 24.77%

Therefore Real GDP increases by 24.77% between 2005 and 2006.

Points Received: 20 of 20