If the average worker produces $70,000 of GDP, by how much will GDP increase if there...
If the average worker produces $70,000 of GDP, by how much will GDP increase if there are 140 million labor force participants and the unemployment rate drops from 5.2 to 4.5 percent?
Homework Answers
Intial Employed people = Labor Force * (1- Unemployment Rate )
= 140 million *(1- 0.052) = 132.72 million
Initial GDP = Per Person GDP* Employed
= 132.72 million *$70,000
= $9.2904 Trillion
Final Employed People = Labor Force *(1- Unemployment)
= 140 million *(1-0.045)
= 133.7 million
Final GDP = Per Person GDP * Employed
= 133.7*$70,000
= $9.359 trillion
Increase in GDP = $9.359 trillion - $9.2904 trillion
= $0.0686 trillion =$ 68.6 billion is the net increase in GDP
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