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Questions and Answers
Based on the provided data for October 2003, how many people were unemployed?
Based on the provided data for October 2003, how many people were unemployed?
8.8 million
Based on the provided data for October 2003, calculate the number of people who were not in the labor force.
Based on the provided data for October 2003, calculate the number of people who were not in the labor force.
75.2 million
Based on the provided data for October 2003, calculate the unemployment rate.
Based on the provided data for October 2003, calculate the unemployment rate.
6.0%
An economy is facing an unemployment rate of 9.3%, with a natural rate of unemployment of 5% and a real GDP of $13,894 billion. According to Okun's Law, what is the approximate loss in output?
An economy is facing an unemployment rate of 9.3%, with a natural rate of unemployment of 5% and a real GDP of $13,894 billion. According to Okun's Law, what is the approximate loss in output?
In 1984, a single-good economy produced 7,000 buckets of chicken priced at $10 each. In 2000, 22,000 buckets were produced, priced at $16 each. Determine the GDP price index for 1984, using 2000 as the base year.
In 1984, a single-good economy produced 7,000 buckets of chicken priced at $10 each. In 2000, 22,000 buckets were produced, priced at $16 each. Determine the GDP price index for 1984, using 2000 as the base year.
In a simple circular flow diagram for a closed economy, which of the following represents the flow of resources from households to firms?
In a simple circular flow diagram for a closed economy, which of the following represents the flow of resources from households to firms?
An individual earns $66,000. Given the income tax brackets presented, calculate the marginal tax rate for the portion of income that falls within the $65,101 - $131,450 bracket.
An individual earns $66,000. Given the income tax brackets presented, calculate the marginal tax rate for the portion of income that falls within the $65,101 - $131,450 bracket.
According to the production possibilities tables, which good should the US produce?
According to the production possibilities tables, which good should the US produce?
Using the provided equations, and assuming a private closed economy, compute equilibrium income.
Using the provided equations, and assuming a private closed economy, compute equilibrium income.
Use the Y=AE model to derive the AD curve. An increase in government spending will shift the AD curve to the left.
Use the Y=AE model to derive the AD curve. An increase in government spending will shift the AD curve to the left.
Flashcards
Unemployed
Unemployed
Individuals who are jobless, actively seeking employment, and available to work.
Labor Force
Labor Force
People who are either employed or unemployed.
Unemployment Rate
Unemployment Rate
Percentage of the labor force that is unemployed. (Number of unemployed / Labor force) * 100
Okun's Law
Okun's Law
Every 1% increase in unemployment results in a 2% decrease in output.
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Circular Flow Diagram
Circular Flow Diagram
A visual model of the economy that shows the flow of goods, resources, and money between households and firms.
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Marginal Tax Rate
Marginal Tax Rate
The additional tax paid for each additional dollar of income.
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Average Tax Rate
Average Tax Rate
The total tax paid divided by total income.
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Terms of Trade
Terms of Trade
The rate at which one product can be exchanged for another.
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Private Closed Economy
Private Closed Economy
A closed economy with only households and firms.
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Private Open Economy
Private Open Economy
An economy that engages in trade with other countries.
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- Data reported by the Bureau of Labor Statistics is from October 2003.
- Working age population: 222.0 million
- Labor force: 146.8 million
- Employment: 138.0 million
Unemployment Calculation
- Number of people unemployed: Labor Force - Employment
Non-Labor Force Calculation
- Number of people not in the labor force: Working Age Population - Labor Force
Unemployment Rate Calculation
- Unemployment Rate: (Number of People Unemployed / Labor Force) * 100
Okun's Law Application
- Economic cost of unemployment is the loss in output.
- Apply Okun's Law to determine loss in output.
- Given: Unemployment rate is 9.3%, natural rate of unemployment is 5%, and real GDP is $13,894 billion.
Single-Good Economy Analysis
- In 1984: Total output was 7,000 buckets of chicken at $10 each.
- In 2000: 22,000 buckets of chicken were purchased at $16 each.
- Base year: 2000
- Task: Determine the GDP price index for 1984.
- Task: Calculate the percentage increase in the price level from 1984 to 2000.
- Task: Determine the real GDP for 1984 and 2000.
Circular Flow Diagram
- Show how goods, resources, and income circulate in a closed economy.
Tax Rate Calculation
- Calculate the marginal and average tax rates for an individual earning $66,000.
- Income Tax Brackets:
- $1 - $16,050: Total Tax $1605
- $16,050 - $65,100: Total Tax $8963
- $65,101 - $131,450: Total Tax $25550
Production Possibilities
- Mexico:
- Broddet: A = 20, E = 0
- Soybeans: R = 12, A = 15, G = 10
- Soybeans: O = 9, D = 5, O = 0
- U.S.:
- Soybeans: A = 33, B = 30, O = 20
- Soybeans: D = 19, O = 10, E = 0
International Trade Questions
- What good should Mexico and the U.S. produce and why?
- Determine the terms of trade for both countries.
- Calculate gains from trade and specialization for each country.
Equilibrium Income (5 Conditions)
- Derive equilibrium income.
- Private Closed Economy
- Private Open Economy
- Mixed Open Economy (government purchases only)
- Mixed Open Economy
Data for Equilibrium Derivation
- C = $100, c = 0.8
- I = $20
- T = $20, G = $20, t = 0
- m = 0, X = $20, M = $10
Y=AE Model
- Use the Y=AE model to derive the AD curve.
- Illustrate a shift in the AD curve using the Y=AE Curve.
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