In: Economics
If the number employed is 150 million, the prime working-age
population is 190 million, and the number unemployed is 10 million,
the labor force participation rate is 65%, then the unemployment
rate is
21.1%
8.2%.
6.3%
5.3%
can not be determined because we do not know what the labor
participation rate for the actual working age population is.
In the United States, from the first quarter of 2020 to the
second quarter of 2020, assume that real GDP decreases by 2.3%, the
unemployment rate rises from 3.6% to 8% and the CPI index goes from
148 to 134. In such an economic scenario,
The aggregate demand curve must have shifted leftward, moving down
along a short-run aggregate supply curve.
The short-run aggregate supply curve must have shifted leftward,
moving up along the aggregate demand curve.
The aggregate demand curve must have shifted rightward, moving up
along a short-run aggregate supply curve.
The short-run aggregate supply curve shifts rightward, moving down
along the aggregate demand curve.
(1) Employed people = 150 million
Unemployed people = 10 million
Labor force = Employed + Unemployed
Labor force = 150 million + 10 million
Labor force = 160 million
Unemployment rate = (Unemployed people / Labor force) *100
Unemployment rate = (10 million / 160 million) * 100
Unemployment rate = 6.25%
Unemployment rat = 6.3%
Answer: Option (C)
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(2) Following things happened in second quarter of 2020.
Real GDP decreases
Unemployment rises.
CPI (i.e., price index) falls from 148 to 134.
In such type of economic scenario the aggregate demand curve must have shifted leftward, moving down along a short run aggregate supply curve.
As we can see in the above graph, leftward shift of AD curve from AD1 to AD2 leads to decrease in price level; decrease in real GDP (and decrease in real GDP implies increase in unemployment rate)
Answer: Option (A)