a) The following formula is relevant for the computation of labour force size.
Labour force size = People those who are employed + People who are unemployed but looking for work
People those who are employed = Full time workers (7000) + Part time workers (2000) = 9,000
People those who are unemployed = Unemployed and looking for work (600) = 600
It is noteworthy that the discouraged workers are not termed as unemployed since they do not seek any unemployment.
Hence, labour force size = 9000 + 600 = 9,600
b) The formula for Labour Force Participation Rate (LFPR) is give below.
LFPR = (Labour force size/ Total population minus dependents)
Dependents tend to include population lower than age of 18, retired people and disabled people
Labour force size = 9.600
Total population minus dependent = 9600 + 500 = 10,100
Hence, LFPR = (9600/10100)*100 = 95.05%
c) The requisite formula for computation of unemployment rate is given below.
Unemployment Rate = (Number of Unemployed/ Labour Force size)*100
Hence, based on the given data, unemployment rate = (600/ 9600)*100 = 6.25%
d) Cyclical Unemployment= Actual rate of unemployment – Natural Rate of Unemployment
Hence, cyclical unemployment = 6.25% - 5% = 1.25%
a) Due to rising in savings by the consumers, there would be an increase in the loanable funds which would to a downward shift in the given supply curve as indicated below.
As is apparent from the above graph, the real interest rate tends to decline from initial rate r1 to new rate r2. The private investment would tend to increase as a lower interest rate would bring down the cost of funds and make the projects more lucrative for the investors and hence increase the offtake of loans. The savings obviously would increase as has already been provided in the question.
b) In the given case also, as the government tends to reduce the tax rates, the savings would tend to increase as now a larger amount of money would be available to both households and businesses. The net result would be an increase in the supply of loanable funds as indicated below.
As is apparent from the above graph, the real interest rate tends to decline from initial rate r1 to new rate r2. The private investment would tend to decrease despite lower interest rate as the businesses on account of lower taxes would already have higher incremental funds available which can be used for various projects instead of borrowing. The savings obviously would increase as the disposable income in the hand of the consumers would increase which then would be apportioned between incremental expenditure and saving.
The key idea is that the population growth can be stopped only if there is small family size. The family size tends to be higher in the developing nations in comparison with that in the developed nations. This difference in family size can be majorly attributed to the difference in health infrastructure. Since, the health facilities and life expectancy is low in developing countries, hence they tend to give birth to higher number of children so as to have some of them survive till adulthood. This is not the case in developed countries. Thus, in order to bring down population, it is essential that the poor children must not die as then the birth rate would slow down and population would come under control. The most surprising fact learned was that various countries tend to follow a similar pattern with regards to development in health outcomes and lower birth rate.
Current GDP per capital of Neverland = $ 10,000
Expected annual growth rate = 2%
Hence, GDP per capita of Neverland after 100 years = 10000*(1.02)100 = $ 72,446.46
Current GDP per capital of Gotham = $ 10,000
Expected annual growth rate = 1.5 %
Hence, GDP per capita of Gotham after 100 years = 10000*(1.015)100 = $ 44,320.46
It is evident from the above computation that per capital GDP is significantly higher for Neverland in comparison to that of Gotham.
The main issue with regards to running budget deficit on a sustainable basis is that the Federal debt would keep on mounting and so would be the underlying interest expense which would tend to capture an ever increasing portion of the taxation revenues. In the light of the same, the credit rating agencies may cut down on the country rating which would lead to a higher cost of debt raised by state and federal agencies and would end up deteriorating public finances further. As a result, the current Australian government led by the Treasurer Scott Morrison is looking to cut down on the expenses and thereby ensure a more balanced budget. Ideally, a small budget deficit is preferred as against to a balanced budget which usually comes at the cost of reducing certain vital expenses at times from social sector expenditure which is not recommended. A surplus budget is also not sustainable as with time the welfare expense would potentially rise to iron out the surplus. A small budget deficit makes sense when there are developmental needs attached particularly in relation to physical and social infrastructure. In relation to Australia also, it makes sense to alter the approach of cutting down on required expenses so as to make room for incremental revenues which are clearly required in wake of an increasingly older population where security along with other services cannot be put to jeopardy.