Question 3a In 1992 Australia’s official unemployment rate was over 10 percent. Since then, the proportion...

Question 3a In 1992 Australia’s official unemployment rate was over 10 percent. Since then, the proportion of jobs in the economy that are part-time has increased while our measured rate of unemployment is now around 5 percent .

What are the implications of an increasing part-time work-force when comparing unemployment rates between 1992 and today?

The article mentions NAIRU, which it defines as the “non-accelerating-inflation rate of unemployment” but the AD-AS model focuses on the natural rate. Define what is mean by the natural rate of unemployment and explain its relationship to the LRAS (long run aggregate supply curve).

Expert Solution

3.

There are different implications of increasing the part time workforce in the economy. The first implication is that it will give the false indication that unemployment rate has decreased in reality. But, the truth is that it will only add volatility to the unemployment rate, because part time jobs are not permanent. The second implication is that decrease in unemployment rate will make it to be near to the natural rate of unemployment, but it will not be improving the real GDP per capital of the individuals in the economy. So, comparing 1992 with today, it can be said that unemployment rate has come down, but it is not due to the increase in quality jobs, rather it is the part time jobs that can engage people for a few hours a week and it may not be sufficient. In 1992, there will be higher % of the people opting for the unemployment benefits if any it is planned by the government, but today, less number of people will be as they are engaged with the part time jobs as well. So, today, judging the economy on the basis of unemployment rate will not be a wise idea, in comparison to the economy of 1992.

Natural rate of unemployment rate is the unemployment rate that exist at the potential level of output. It has a relationship with the LRAS, because LRAS defines the potential output level produced in the economy. If LRAS shifts to the right with increase in technology and resources, it creates more employment opportunity and natural rate of unemployment will decrease and vice versa. So, it can be said that natural rate of unemployment is linked with the LRAS.

Rahul Sunny answered 1 year ago

The official unemployment rate in this country has been below the natural rate of unemployment (4.5%)...

The official unemployment rate in this country has been below the natural rate of unemployment (4.5%) for eleven months, which would ordinarily put pressure on wages and create inflation. Yet, the average earnings for nonfarm private employees has only increased by 2.6%, which is marginally better than the inflation rate of 2.13% in the same year. Identify and analyze factors that may explain why high employment rates have not resulted in a very tight labor market.

The current unemployment rate is 6 percent. If the natural rate of unemployment is 5.5 percent,...

The current unemployment rate is 6 percent. If the natural rate of unemployment is 5.5 percent, then A. the economy is at full employment. B. there is cyclical unemployment equal to 0.5 percent of the labor force. C. there is frictional and structural unemployment equal to 0.5 percent of the labor force. D. there is cyclical unemployment equal to 5 percent of the labor force. Which of the following groups will have their real income reduced if inflation is greater...

In this case study you investigate how good the official ‘unemployment rate’ captures the unemployment in...

In this case study you investigate how good the official ‘unemployment rate’ captures the unemployment in the economy. You should reference the two articles provided on this subject above, the material in your textbook related to this topic and one more article of your choosing. Address the following questions in your paper: 1. Does the official unemployment rate capture the true unemployment in the economy? 2. What are the ways to address any flaws in the report?

Does the official unemployment rate overstate the true level of unemployment, understate the true level of...

Does the official unemployment rate overstate the true level of unemployment, understate the true level of unemployment or accurately measure the true level of unemployment? Be certain to clearly and carefully explain your answer.

Some people argue that the official unemployment rate understates true unemployment, while others argue that it...

Some people argue that the official unemployment rate understates true unemployment, while others argue that it could actually overstate true unemployment in cases. Explain each of these positions, giving some examples of what might cause the official rate to be either too high or too low. Do you think we should make any changes to how we calculate unemployment? If so, what would you propose?

The BLS calculates the official unemployment rate as ratio of the number of people unemployed to...

The BLS calculates the official unemployment rate as ratio of the number of people unemployed to the labor force. Does this figure correctly reflect the the magnitude of the unemployment problem? Is it an overestimate? Underestimate? Discuss.

The US unemployment rate (actual unemployment, u) is 8.4 percent, while the natural rate of unemployment...

The US unemployment rate (actual unemployment, u) is 8.4 percent, while the natural rate of unemployment (nru) is 4.4 percent. (i) Using Okun's Law, compute the US current percentage GDP gap. Show your computation. (ii) State your answer in words, comparing actual to potential output. (iii) Is the US GDP gap positive or negative—and why? Note: "Okun’s Law Arthur Okun was the first macroeconomist to quantify the inverse relationship between the actual unemployment rate and the GDP gap. He noticed...

Research the change in the unemployment rate of Greece over the past 10 years and explain...

Research the change in the unemployment rate of Greece over the past 10 years and explain the main costs of unemployment to Greece, in government, businesses and community perspective.

The following data is the unemployment rate in a metropolitan community over the last 10 years....

The following data is the unemployment rate in a metropolitan community over the last 10 years. Use exponential smoothing with a smoothing constant of a = 0.2, 0.4, 0.6, and 0.8 to find the best forecast for unemployment for next year. Using mean absolute deviation which forecast constant provides the best prediction of unemployment? Why? Year Rate Year Rate 1 7.2 6 5.5 2 7.0 7 6.7 3 6.2 8 7.4 4 5.0 9 6.8 5 5.3 10 6.1

If the US economy was growing at a rate of 2 percent or better in mid-1992,...

If the US economy was growing at a rate of 2 percent or better in mid-1992, how is it possible that unemployment was rising? Please explain the specifics of the economy in the early to mid-1990s which caused unemployment to grow. Please be concrete, I will rate

Question