Econ-545 Week 6 Quiz Essay Example
| 1. | Question: | (TCO F) The size of the labor force in a community is 1,000, and 850 of these folks are gainfully employed. In this community, 50 people over the age of 16 do not have a job and are not looking for work. In addition, 80 people in the community are under the age of 16. The unemployment rate is ______. | | | Student Answer: | | Unemployment rate=unemployed/labor force*100 150/1000*100=15% 1000-850=150 (number of people unemployed) then divided by total labor force divided by 100 | | 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 (1,000), and you are also told that 850 are employed. Therefore, 150 are unemployed, and the unemployment rate is simply 150/1,000 or 15%.
| | | | Points Received: | 15 of 15 | | Comments: | | | | | | | 2. | Question: | (TCO F) Suppose nominal GDP in 2005 was $15 trillion, and in 2006 it was $16 trillion. The general price index in 2005 was 100, and in 2006 it was 103. Between 2005 and 2006, real GDP rose by what percent? | | | Student Answer: | | Nominal GDP and REAL GDP must be equal in the base year.2005 15tr, price index = 100 since nominal and real GDP must be equal in the base year 15tr/1.03=16.56tr(16.56-16.00)/16.00=4% or 3.5% | | 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 = [$15 T / Real GDP] x 100
So, Real GDP must equal $15 T. You could also recognize that Real GDP and nominal GDP are the same in the base year.For 2006:
103 = [$16 T / Real GDP] x 100
1.03 = [$16 T / Real GDP]
Real GDP = $16 T / 1.03
So, Real GDP must equal $15.534 T.The percentage
| | | | Points Received: | 15 of 15 | | Comments: | | | | | | | 2. | Question: | (TCO F) Suppose nominal GDP in 2005 was $15 trillion, and in 2006 it was $16 trillion. The general price index in 2005 was 100, and in 2006 it was 103. Between 2005 and 2006, real GDP rose by what percent? | | | Student Answer: | | Nominal GDP and REAL GDP must be equal in the base year.2005 15tr, price index = 100 since nominal and real GDP must be equal in the base year 15tr/1.03=16.56tr(16.56-16.00)/16.00=4% or 3.5% | | 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 = [$15 T / Real GDP] x 100
So, Real GDP must equal $15 T. You could also recognize that Real GDP and nominal GDP are the same in the base year.For 2006:
103 = [$16 T / Real GDP] x 100
1.03 = [$16 T / Real GDP]
Real GDP = $16 T / 1.03
So, Real GDP must equal $15.534 T.The percentage