Principles of Macroeconomics Unit 4 Homework Questions
Chapter 7 Unemployment and Inflation – Questions 2, 3, 5, and 7
- (Measuring Unemployment) Suppose that the U.S. non-institutional adult population is 230 million and the labor force participation rate is 67 percent.
- What would be the size of the U.S, labor force?
- If 85 million adults are not working, what is the unemployment rate?
- (Types of Unemployment) Determine whether each of the following would be considered frictional, structural, seasonal, or cyclical unemployment:
- A UPS employee who was hired for the Christmas season is laid off after Christmas.
- A worker is laid off due to reduced aggregate demand in the economy.
- A worker in a DVD rental store becomes unemployed as video-on-demand cable service becomes more popular.
- A new college graduate is looking for employment.
- (The Meaning of Full Employment) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would a more generous unemployment insurance system affect the full employment figure?
- (Inflation) Here are some recent data on the U.S. consumer price index:
Year CPI Year CPI Year CPI
1988 118.3 1994 148.2 2000 172.2
1989 124.0 1995 152.4 2001 177.1
1990 130.7 1996 156.9 2002 179.9
1991 136.2 1997 160.5 2003 184.0
1992 140.3 1998 163.0 2004 188.9
1993 144.5 1999 166.6 2005 195.3
2006 201.8
Compute the inflation rate for each year 1993-2012 and determine which were years of inflation. In which year did deflation occur? In which year did disinflation occur? Was there hyperinflation in any year?
Chapter 8 – Productivity and Growth – Questions 1, 5, and 7
- (1. (Measuring Labor Productivity) How do we measure labor productivity? How do changes in labor productivity affect the U.S. standard of living?
- (Long-Term Productivity Growth) Suppose that two nations start out in 2013 with identical levels of output per work hour—say, $100 per hour. In the first nation, labor productivity grows by 1 percent per year. In the second, it grows by 2 percent per year. Use a calculator or a spreadsheet to determine how much output per hour each nation will be producing 20 years later, assuming that labor productivity growth rates do not change. Then, determine how much each will be producing per hour 100 years later. What do your results tell you about the effects of small differences in productivity growth rates?
- (Technological Change and Unemployment) What are some examples, other than those given in the chapter, of technological change that has caused unemployment? And what are some examples of new technologies that have created jobs? How do you think you might measure the net impact of technological change on overall employment and GDP in the United States?
References
McEachern, W. A. (2015). ECON macroeconomics (4th ed.). Stamford, CT: Cengage Learning
