Economics. Please answer in detail. Thank you! You have just graduated from univ

Question

Economics. Please answer in detail. Thank you!

You have just graduated from university. You, your older sister, your mother, and your father are comparing the economic situation facing you. The year you each started your first job, the CPI in that year, your staring salary, and the labour force numbers are given below Which of you started your first job with the highest real income, and what was it? Which of you started your first job under the highest unemployment rate, and what was it? Which of you started your first job facing the highest output gap, and what was it? Considering 1983 as base year, which of you faced the highest the inflation rate?

Explanation / Answer

a) Real income = nominal income/CPI*CPI in base year

Let 1998 be the base year

Real income of father = 24900/83*100 = $30,000

Real income of mother = 29120/91*100= $32,000

Real income of sister = 26000/100*100= $26000

Real income of yours= 32000/110*100=29090.91

Your mother has the highest real incmoe of $32,000

bunemployment rate = (# of unemployed / labor force) x 100%

)Unemployment rate in 1973 = (14-12)/14= 14.29%

Unemployment rate in 1983 = (17.5-16.25)/17.5= 7.14%

Unemployment rate in 1998 =(21-18.76)/21= 10.67%

Unemployment rate in 2013 =(24-21)/24= 12.50%

Highest unemployemt rate was in 1973, your father = 14.29%

c)output gap in 1973=Unemployment rate- natural rate of unemployment =14.29%-7% = 7.29%

output gap in 1983=Unemployment rate- natural rate of unemployment =7.14%-8% = -0.86%

output gap in 1998=Unemployment rate- natural rate of unemployment =10.67-9% =1.67%

output gap in 2013=Unemployment rate- natural rate of unemployment =12.50%-10% = 2.5%

Highest output gap in 1973, your father started in hisghest output gap.

d) Inflation in 1973 = (91-83)/83= 9.64%

Inflation in 1983 = 83-83)/83 = 0%

Inflation in 1998 = (100-83)/83= 20.48%

Inflation in 2013 =(110-83)/83= 32.53%

You face the highest inflation of 32.53%

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.