module 7 macroeconomics
Homework 07
Unemployment & Inflation
Answer the following based on chapter 08 and 09 of OpenSTAX. Ensure that any formulas used are clearly shown by either using a formula in Excel or writing the formula out—as you would for a math class.
Question | Point Value |
1 | 10 |
2 | 10 |
3 | 15 |
4 | 15 |
5 | 20 |
6 | 10 |
7 | 20 |
Total | 100 |
Using data from the Bureau of Labor Statistics (bls.gov), graph the monthly unemployment rate from Jan 2004 to present.
Question 2Using data from the Bureau of Labor Statistics (bls.gov), graph the monthly inflation rate from Jan 2004 to present.
Question 3A country with a population of eight million adults has five million employed, 500,000 unemployed, and the rest of the adult population is out of the labor force.
What’s the unemployment rate?
What share of population is in the labor force?
Create a pie chart that divides the adult population into these three groups.
Calculate the requested piece of information using the following information.
Civilian labor force using
Population: 300,000,000 (civilian, non-institutional)
Participation rate: 75.0%
Employed: 200,000,000 people
Unemployed: 25,000,000 people
Unemployment rate using
Population: 250,000,000
Participation rate: 50%
Employed: 100,000,000 people
Participation rate using
Population: 500,000,000
Employed: 300,000,000
Unemployed: 100,000,000
The basket of goods below is an approximation for a person’s living expenses in a given year.
Good | Quantity | 2013 Price | 2014 Price |
Apartment Rent | 12 | $500 | $525 |
Utilities | 12 | $150 | $175 |
Daily Food Purchase | 365 | $15 | $16 |
Gasoline (gallon) | 520 | $3.00 | $2.75 |
Physician Services | $100 | $100 | |
Cruise Vacation | $900 | $1,000 |
Using 2013 as the base year,
Calculate the price index
Calculate the rate of inflation
Using 2014 as the base year,
Calculate the price index
Calculate the rate of inflation
Consider sticky wages. Do you think it is rational for workers to prefer sticky wages to wage cuts, when the consequence of sticky wages is unemployment for some workers? Why or why not?
Question 7If inflation rises unexpectedly by 5%, indicate for each of the following why the economic actor is helped, hurt, or unaffected:
A union member with a COLA wage contract.
Someone with a large stash of cash in a safe deposit box.
A bank lending money at a fixed rate of interest.
A person who is not due to receive a pay raise for another 11 months.