According to the In the News below So per capita GDP data ov

According to the \"In the News\" below: So per capita GDP data overstate or understate the rise In the U.S. well-being since 1990? In the News: Material Wealth vs. Social Health National income accounts are regularly reported and widely quoted. They do not, however, adequately reflect the nation\'s social performance. To measure more accurately the country\'s social health, a including infant mortality, drug abuse, health insurance coverage, and poverty among the aged, According to this index, America\'s social health increased only 5.6 percent from 1990 to 2009, despite a 30.4 percent increase increase in real GDP per capita. Unemployment According to the figure below: What percentage of the civilian labor force was employed? What percentage of the civilian labor force was unemployed? What percentage of the population was employed in civilian jobs? According to Okun\'s Law, how much output (real GDP) was lost in 2010 when the nation\'s unemployment rate increased from 9.3 percent to 9.6 percent? (Real GDP in 2010 was $13,088 billion). More jobs were created and unemployment rate increased. How is that possible? Please explain.

Solution

(5)

Per capital GDP understates the social well-being, because a biggest flaw in GDP is that it ignores the standard of living in a country. GDP may be high due to, for example, high government spending on military goods, or in increasing the size or military forces, which does not contribute to the residents\' well-being but increases GDP.

(1)

(a) % employed = Civilian employed**/ Civilian labor force = 129 million / 154 million = 0.8377, or 83.77%

(b) % unemployed, cividial = Civilian unemployed / Civilian labor force = 14.8 million / 154 million = 0.0961, or 9.61%

(c) % of population employed in civilian jobs = Civilian employed / Total population

= 129 million ** / 210 million** = 0.6143, or 61.43*

** Data is very blurred and difficult to read. I\'ve answered to the best of what data I could read.

(2)

Okun\'s law states that, as unemployment increases by 1%, GDP decreases by 2%.

Here, increase in unemployment = (9.6 - 9.2)% / 9.3% = 0.323, or 3.23%

So, GDP will decrease by (3.23 x 2) = 6.46%

Loss in GDP = $13,088 billion x 6.46% = $845.48 billion

NOTE: First 3 questions are answered.