economics today 7-6. In a country with a labor force of 200, a different group o
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economics today 7-6. In a country with a labor force of 200, a different group of 10 people becomes unemployed each month, but becomes employed once again a month later. No others outside these groups are unemployed. a. What is this country's unemployment rate? b. What is the average duration of unemployment? c. Suppose that establishment of a system of unemployment compensation increases to two months the interval that it takes each group of job losers to become employed each month. Nevertheless, a different group of 10 people still becomes unemployed each month. Now what is the average duration of unemployment? d. Following the change discussed in part (c), what is the country's unemployment rate?Explanation / Answer
7-6
In a country with a labor force of 200, a different group of 7 people becomes unemployed each month, but becomes employed once again a month later. No others outside these groups are unemployed.
a. Calculate thiscountry’s unemployment rate. ___%
Unemployment Rate = 7/200*100 = 3.5%
b. The average duration of unemployment in this country is ____.
The average duration of unemployment is one month
c. Suppose the establishment of a system of unemployment compensation increases to two months the interval that it takes each group of job losers to become employed each month. Nevertheless, a different group of 7 people still becomes unemployed each month. Now the average duration of unemployment is _____.
The average duration of unemployment is two month
d. Following the establishment of a system of unemployment compensation calculate thecountry’s unemployment rate. ___%
In this case the unemployment rate will be double of the previous one that is 7%.
7-14
At present, the nominal interest rate 7%, and the expected inflation rate is 5%. The current year is the base year for the price index used to calculate inflation.
a. The real interest rate will be 2%. To find the real interest rate, we take the nominal interest rate and subtract the inflation rate.
b. What is the anticipated value of the price index next year?
Anticipated value of price index next year = Price index of base year + Expected inflation Rate
Base year index is always 100
Anticipated value of the price index for next year = 100 + 5 = 105
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