# MacroEconomics Problem set 2

Problem set 2 (chapters 7 & 8)
1) A country with a civilian population of 120,000 (all over age 16) has 100,000 employed and 12,000 unemployed persons. Of the unemployed, 7,000 are frictionally unemployed and another 2,000 are structurally unemployed. On the basis of this data, answer the following questions: (show your work for credit)
a. what is the size of the labor force?
b. What is the unemployment rate?
c. What is the natural rate of unemployment for this country?
d. Is this economy in recession or expansion? Explain.
2) Visit www.bls.gov and search through the tables on unemployment to answer the following questions
a. What is the current national unemployment rate for the United States?
b. What is the current national unemployment rate for teenagers?
c. What is the current unemployment rate for adult women?
3) Consider a country with 200 million residents, a labor force of 170 million, and 10 million unemployed. Answer the following questions: (show your work for credit)
a. What is the labor force participation rate?
b. What is the unemployment rate?
c. If 3 million of the unemployed become discouraged and stop looking for work, what is the new unemployment rate?
4) In 1991, the Barenaked Ladies released their hit song “if I had a Million Dollars.” How much money would the group need in 2017 to have the same amount of real purchasing power that they did in 1991? Note that the consumer price index in 1991 was 136.2 and in 2017 it was 244.  Show your work for credit.
5) While rooting through the attic you discover a box of old tax forms. You find that your grandmother made \$75 working part-time during December 1964 when the CPI was 31.3. How much would you need to have earned in in July of 2018 to have at least as much real income as your grandmother did in 1964? The CPI for July 2018 was 252.006. Show your work for credit.

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