Suppose that the population is 275 million. Also assume that the labor force is 135 million and that 130 million people are employed. Calculate the unemployment rate
What will be an ideal response?
The unemployment rate is (5 million unemployed ÷ 135 million labor force) × 100 = 3.7 percent.
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In the above figure, suppose the economy had been at point A and now is at B. What could have led to the movement to B?
A) a tax hike B) an increase in government expenditures on goods and services C) Winter storms cause factories in the north to be shut down for several weeks. D) an increase in the money wage rates
Does a competitive long-run equilibrium require cost-minimization?
A) Yes, if firms fail to be as efficient as their competitors, they are driven out of the market. B) No, in the long run, firms make zero profits. C) Yes, if they didn't, even less efficient firms would enter the industry. D) No, because competition ensures their survival.