Assume the following Production Possibilities Schedule is for the United States.
ID: 1218246 • Letter: A
Question
Assume the following Production Possibilities Schedule is for the United States.
Consumer Goods Producer Goods
400 0
300 150
200 250
100 325
0 350
Use the above schedule to answer the following questions:
Assume that the United States is operating with the above schedule and is currently producing 200 Consumer Goods and 250 Producer Goods. What is the opportunity cost of producing 25 more Producer Goods?
Now assume the US is operating with the above schedule and is currently producing 200 Consumer Goods and 150 Producer Goods. What is the opportunity cost of 15 more Producer Goods?
Assume the United States is currently producing 200 Consumer Goods and 250 Producer Goods. Brazil needs 50 Producer Goods to expand highways into the farming regions around Sao Paulo. They offer to trade Consumer Goods for the 50 Producer Goods. In order to get the 50 Producer Goods, the United States would have to increase production of Producer Goods from 250 to 300. What is the least amount the US should accept for the 50 Producer Goods? What is the most the United States should accept for the 50 producer Goods?
Question 2: Okun’s Law
Assume the United States has the following employment information:
People Working One Full Time Job: 110,000,000
People Working One Part Time Job: 24,000,000
People Working Two Jobs: 5,000,000
Discouraged Workers: 460,000
Labor Force: 148,000,000
Natural Rate of Unemployment 5%
What is the unemployment rate in this economy?
How many of these people are either frictionally or structurally unemployed?
Is the economy at full employment?
Is this economy in a recession?
If the actual (current) GDP is $12,364 billion, what is the GDP Gap?
Explanation / Answer
Answer:
Question 2
Given the employment information is:
People Working One Full Time Job: 110,000,000
People Working One Part Time Job: 24,000,000
People Working Two Jobs: 5,000,000
Discouraged Workers: 460,000
Labour Force: 148,000,000
1. What is the unemployment rate in this economy?
Unemployed rate = (No. of unemployed / Labour force)*100
Unemployed = Labour force - Employed
= 148,000,000 - 139,460,000
= 8,540,000
Now we can find unemployed rate that is get the unemployment rate divided by Labour force
Unemployed rate = (8,540,000/148,000,000)*100
= 5.7%
2. How many of these people are either frictionally or structurally unemployed?
Frictional or Structural Unemployed = 148,000,000 - 139,460,000
= 8,540,000
3. Is the economy at full employment?
There is a Full employment, because the highest amount of labour can be employed in this economy.
4. Is this economy in a recession?
No, because there is full employment.
5. If the actual (current) GDP is $12,364 billion, what is the GDP Gap?
The Natural Rate of Unemployment is: 5%
The Unemployment rate is: 5.7%
= 5.7% - 5%
= 0.7%
The actual GDP = $12,364 * 0.7%
= 86.54%
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