Question

DEFINE THE FOLLOWING TERMS AND CONCEPTS IN A CLEAR, CONCISE, AND EXPLICIT WAY. DEMONSTRATE THE RELATIONS BETWEEN THEM!

a)Value added & intermediate good.

b)Labor force & unemployment.

Answer 1

(a)

The value added can be defined as the amount by which the value of a good is increased at each stage of its production and in this process, the initial cost is excluded.

The intermediate good can be defined as the producer goods or semi-finished good which are partly complete and it is used in the form of inputs for the production of some other final goods or some other semi-finished goods.

When intermediate goods are used in the form of inputs for the production of final goods, then it adds some values to the product in which intermediate goods have been used. Hence the intermediate goods add value to the product.

(b)

The labor force is the sum of the employed and unemployed workers.

The Unemployment can be defined as the total number of unemployed workers who are willing to work at the existing wage rate but they are not getting the work.

Unemployment rate= (Total number of unemployed workers / labor force)*100

It means there is an inverse relationship between labor force and unemployment rate.