Question 252.5 pts The catch-up effect refers to the idea that Flag this Questio

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Question 252.5 pts

The catch-up effect refers to the idea that

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Question 262.5 pts

Suppose some country had an adult population of about 25 million, a labor-force participation rate of 60 percent, and an unemployment rate of 6 percent. How many people were unemployed?

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Question 272.5 pts

Table 28-1

Labor Data for Aridia

2010

2011

2012

2000

3000

3200

1400

1300

1600

200

600

200

Refer to Table 28-1. The labor force of Aridia

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Question 282.5 pts

Angelica is an unpaid homemaker who works as a volunteer at the local Red Cross and is currently not looking for a paid job. The Bureau of Labor Statistics counts Angelica as

saving will always catch-up with investment spending.

Explanation / Answer

Question 252 - The catch-up effect refers to the idea that it is easier for a country to grow fast and so catch-up if it starts out relatively poor.

The catch-up effect is also known as convergence and is a theory that states that poor or developing economies grow faster than developed economies. The result is that all global economies concerge in terms of per capita income in the long-term.

Question 262

Adult population = 25 million

Labor force participation rate = 60%

Therefore, potential labor force = 25*60% = 15 million

Unemployment rate = 6%

Number of people unemployed = 15*6% = 0.9 million

Refer to Table 28-1. The labor force of Aridia

2010

2011

2012

2000

3000

3200

1400

1300

1600

200

600

200

1800

The answer therefore is increased from 2010 to 2011 and decreased from 2011 to 2012.

Question 282

Angelica is neither in the labor force nor unemployed.

Angelica cannot be counted as unemployed because according to the BLS anyone who has not searched for a job in the prior 4 weeks (before the survey) is not umemployed.

Further, people is labor force = Unemployed + Employed

Therefore, Angelica does not fall in the labor force category as well.

Year

2010

2011

2012

Adult population

2000

3000

3200

Number of employed

1400

1300

1600

Number of unemployed

200

600

200

Labor Force (Unemployed + Employed) 1600 1900

1800

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