Question

The tables below describe the employment and price level situation for the country of Gatoria over the past four years. Fill out the tables and use them to answer the following questions about how policymakers and politicians in the country might respond to such a situation.

Year	# Unemployed (in millions)	# Employed (in millions)	Unemployment Rate
2015	16	210
2016	22	205
2017	20	195
2018	18	200

1. What has been happening to the unemployment rate since 2015? Use the AS-AD model to illustrate what has happened to the economy since 2015. Assume the economy was at full employment in 2015. From this initial condition, draw a new aggregate demand curve to show how the economy has changed. Describe how the new equilibrium is different from the old one both in terms of the price level and output level.
2. Some business interests are concerned about the lack of sales and profits during this time and argue that it is time to engage in strong trade restrictions including tariffs and quotas against foreign products. Would adding trade restrictions help the unemployment situation? Why or why not?

Answer 1

The new equilibrium is different from the old one. In the new equilibrium there is incresae in price level and output ncreases. In the old eqquilibrium there is decrease in price level and output decresaes.
II JULY 1 2 Tuesday मंगलवार Tuesday ate = No. وار ۱۹ Labour VO ل از او همه بیمه ها - 1 0 - 021 ا مام 2 . مع وهم ملح 2-93व्य ما 2015 and 16, unemployment معنا و مفهوم I R Appointments

wout 16 जुलाई JULY wa 13 Wednesday ERAS SRAS wo تعیش whwder GOP lalaman get Demand definent unemploymen lemand duracts as nempe LRAS مهران Thereas
,

Trade restrictions decrease the profitability of exporting firms and so there is deteriration in unemployment situation.