Question

Use the following table to answer the questions. Columns (1) and (2) give information about the short- run aggregate supply curve for Arboc. Column (3) shows total employment at different output levels. There are 200,000 workers in the total labor force. Normally 10,000 workers are structurally and frictionally unemployed. (2) Aggregate Output 2550 (4) Output (5) Output Demanded 800 (1) Overall Price Level (3) Total Employment Demanded 191000 100 4.60 Opeks 4.50 Opeks 4.40 Opeks 4.30 Opeks 4.20 Opeks 4.10 Opeks 4.00 Opeks 400 1100 2500 2400 2300 190000 189000 188000 184000 700 1400 1700 1000 1300 2000 2300 2600 2000 1600 1900 178000 168000 1600 1000 Based on the behavior of the Aggregate Supply curve, potential GDP is %. Opeks and the natural rate of unemployment is Columns (1) and (4)) give information about the aggregate demand curve for Arboc. _Opeks and equilibrium output is Equilibrium overall price level is %. The unemployment rate is

Answer 1

Based on the behavior of the Aggregate Supply curve, potential GDP is 2500 (4.5 opeks) Opeks and the natural rate of unemployment is 5% Columns (1) and (4) give information about the aggregate demand curve for Arboc. Equilibrium overall price level is 4.1 Opeks Opeks and equilibrium output is 1600 . The unemployment rate is_11% %.

Natural rate of unemployment = 10000/200000 = 5%

So, people employed at natural rate of unemployment = 1900000. Output at this level, is potential output.

Equilibrium output is intersection point between AD and SRAS that is 1600.

Unemployment rate = (200000-178000)/200000

Unemployment rate = 11%