Suppose Initially That the Working-Age Population Is 220 Million, the Labor

question 341

Multiple Choice

Suppose initially that the working-age population is 220 million, the labor force is 150 million, and the official U-3 unemployment rate is 10 percent. 5 million new jobs are created and filled by 5 million people who had previously been discouraged workers. What is the new U-3 unemployment rate?

• A) 6.25 percent
• B) 6.7 percent
• C) 9.7 percent
• D) 8.7 percent

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Definitions:

Chain-Weighted Price Index

An economic measure that accounts for changes in quantities and prices to more accurately reflect the real growth over time.

Consumer Price Index

Measure of the aggregate price level.

Laspeyres Index

A price index used to measure the price change between a base period and the current period, using the base period quantities as weights.

Paasche Index

An economic measure that calculates the change in the price level of goods and services purchased by the consumer in the current period compared to a selected base period, weighting the current period prices.