MACROECONOMIC STUDY GUIDE TEST year Make the 1 In the table

MACROECONOMIC STUDY GUIDE -TEST year. Make the 1. In the table below are statistics showing the labor force and total employment in month 1 and month 2 of the same computations necessary to complete the table. (Number of persons is in thousands) Month 1 Month 2 36,297 137,065 129,558 129.526 Labor force Unemployment rate(N) -- What are five economic sbocks that may cause business cycles? 3. What is Okun\'s law? Give an example of how it works 4. What are two criticisms of the unemployment rate? How do these criticisms relate to the overstating or understating of the 2. unemployment rate? 5. Explain the differences among the frictional, structural, and cyclical forms of unemployment Suppose an economy\'s real GDP is $50,000 in year I and $55,000 in year 2. What is the growth rate of its GDP? Assume that population was 100 in year l and 105 in year 2. What is the growth rate in GDP per capita? 6. 8. What is meant by economies of scale and what is the importance of this concept to economy 9. What is the value added by all the firms A-E from the production of a product as described below? What did each firm add separately in value and what does it total? Stage of production Sales value of product Firm A Firm B Finn C Firm D Fim E $ 4.500 8,600 4,700 20,100 32.300 10. The following data show nominal GDP and the appropriate price index for several years. Compute real GDP for each year and indicate whether you have \"inflated\" or \"deflated\" nominal GDP in finding real GDP. All GDP are in billions. Nominal Price level Inflated ( Year GDP index Real GDP Deflated (D) 1$117 2 124 104 3 143 85 149 96 5 178 112 6 220 143

Solution

1. Labor force = Employed + unemployed

Unemployment rate =( No. Of unemployed / labor force )*100

In month 1 ,

Unemployed = labor force - employed = ( 136,297 - 129,558) = 6,739

Unemployment rate = (6739 /136297) *100 = 4.9?

In month 2,

Unemployed = 137065 -129526 = 7539

Unemployment rate = (7539/137065)*100 = 5.5?