Please answer part (e), (f), and (g)! Thank you! Thank you! EXERCISE 2 Unemploym
ID: 1130216 • Letter: P
Question
Please answer part (e), (f), and (g)! Thank you!
Thank you!
EXERCISE 2 Unemployment (30 points) PART ONE (15 points) Consider an economy that has 150,000 people who are 16 years old or older. Of this group, 2,000 are currently in the military, 1,000 are homemakers, 10,000 are retired, and 14,000 are full-time students who are not employed. Further 10,000 are currently not working and are actively seeking jobs, 5,000 are temporarily laid off and anticipate that their jobs will resume within the next two months, and 5,000 people are currently not working and are not actively sceking jobs because they live in a community with a severely depressed economy. All other adults in this economy can be assumed to be working: in this group, 80% are fully employed and 20% are underemployed. What is the civilian labor force in this economy? (2 points) What is the number of unemployed people in this economy? (2 points) What is the number of employed pcople in this economy? (2 points) Calculate the unemployment rate. (2 points) Calculate the civilian labor force participation rate. (2 points) The government of this economy is considering changing its definition of unemployed so that it includes discouraged workers. If this new policy is implemented, what will the new unemployment rate equal? (2.5 points) Suppose the government changes its classification of discouraged workers and, in addition, decides to treat underemployed workers as unemployed workers since this group is not fully utilizing their labor resources. If both of these policy changes are implemented, what will happen to the unemployment rate? (2.5 points) a) b) c) d) e) 1) g)Explanation / Answer
(e)
Calculate the civilian labor force -
Civilian labor force = Working age population - Persons in military - Homemakers - Retired - Full time students - Discouraged workers
Civilian labor force = 150,000 - 2,000 - 1,000 - 14,000 - 5,000 = 118,000
Calculate the civilian labor force participation rate -
Civilian labor force participation rate = [Civilian labor force/Working-age population] * 100
Civilian labor force participation rate = [118,000/150,000] * 100 = 78.67%
The civilian labor force participation rate is 78.67 percent.
(f)
The government has changed its definition of unemployed workers and now considers discouraged workers as unemployed as well.
Unemployed = Persons currently not working but actively seeking jobs + Temporary laid off workers + discouraged workers
Unemployed = 10,000 + 5,000 + 5,000 = 20,000
New civilian labor force = Old civilian labor force + discouraged workers = 118,000 + 5,000 = 123,000
Calculate the new unemployment rate -
Unemployment rate = [Unemployed/New civilian labor force] * 100
Unemployment rate = [20,000/123,000] * 100 = 16.26%
The new unemployment rate is 16.26%
(g)
The government has decided to consider discouraged workers as well as underemployed workers as unemployed.
Unemployed = Persons currently not working but actively seeking jobs + Temporary laid off workers + discouraged workers + Underemployed workers
Unemployed = 10,000 + 5,000 + 5,000 + 20,600 = 40,600
New civilian labor force = Old civilian labor force + discouraged workers = 118,000 + 5,000 = 123,000
Calculate the new unemployment rate -
Unemployment rate = [Unemployed/New civilian labor force] * 100
Unemployment rate = [40,600/123,000] * 100 = 33%
Thus, if both these policy changes are implemented, the unemployment rate will rise or increase.