Question

1.The 2020 Q2 unemployment rate in New Zealand was 4.0%. This represented 110,000 unemployed individuals. If the working-age population (adult, civilian, non-institutionalized) was 3,980,000, calculate the labor force participation rate.

2.The 2020 Q2 unemployment rate in New Zealand was 4.0%. This represented 110,000 unemployed individuals. If the working-age population (adult, civilian, non-institutionalized) was 3,980,000, calculate the number of employed individuals.

3.Between July and September of 2018, New Zealand's real disposable income increased from 61.3 billion NZD to 61.9 billion NZD. During that same period, New Zealand's real consumption increased from 38.9 billion NZD to 39.2 billion NZD.Calculate the MPC for New Zealand

Answer 1

(1) Unemployment rate = 4%

Unemployed people = 110,000

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Unemployment rate = (unemployed people / Labor force)

=> 4% = (110,000 / Labor force)

=> 0.04 = (110,000 / Labor force)

=> Labor force = (110,000 / 0.04)

=> Labor force = 2,750,000

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Labor force participation rate = (Labor force / Working age population)*100

=> Labor force participation rate = (2,750,000 / 3,980,000)*100

=> Labor force participation rate = 69.095%

=> Labor force participation rate = 69.10%

The labor force participation rate is 69.10%

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(2)

Unemployment rate = 4%

Unemployed people = 110,000

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Unemployment rate = (unemployed people / Labor force)

=> 4% = (110,000 / Labor force)

=> 0.04 = (110,000 / Labor force)

=> Labor force = (110,000 / 0.04)

=> Labor force = 2,750,000

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Labor force = unemployed + employed

=> 2,750,000 = 110,000 + employed

=> Employed = 2,750,000 - 110,000

=> Employed = 2,640,000

The employed individuals is 2,640,000

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(3)

New Zealand's real disposable income increased from 61.3 billion NZD to 61.9 billion NZD.

=> change in disposable income = 61.9 billion - 61.3 billion

=> change in disposable income = 0.6 billion.

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During that same period, New Zealand's real consumption increased from 38.9 billion NZD to 39.2 billion NZD

=> change in consumption = 39.2 billion - 38.9 billion

=> change in consumption = 0.3 billion.

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Marginal propensity to consume measures the chnage in consumption due to change in disposable income.

=> MPC = (change in consumption / change in disposable income)

=> MPC = (0.3 billion / 0.6 billion)

=> MPC = 0.5

The MPC for New Zealand is 0.5