Reference no: EM132670181

1. Suppose that the country of Bigu has a population of 127 million, of which 83 million are in the working-age population. Of those, 25 million are not in the labor force and 52 million are employed.

a. Calculate the working-age population as a percentage of the population.

b. Calculate the labor-force participation rate.

c. Calculate the unemployment rate.

2. Suppose we wish to decompose output growth into that part due to growth in hours worked and that part due to growth in labor productivity. In the table below are data on output and hours worked at the end of each decade (in the fourth quarter).

a. Calculate the growth of output and hours worked in each decade (that is, from the fourth quarter of the tenth year of the previous decade to the fourth quarter of the tenth year of each decade). Show your work and calculate each growth rate in percentage points with one decimal place.

b. From your calculations in part a, calculate the growth rate of labor productivity (that is, the growth rate of output per hour worked) in each decade. You may use a sensible approximation. Show your work.

c. Which decade shows the fastest growth in output? The slowest? Which decades show the fastest and slowest growth in output per hour? Can you interpret these results in a historical context?

3. Suppose that in 2013 a country has capital of 450 units, labor of 5,000 units, and output of 10,000 units. In 2014, the country has capital of 480 units, labor of 5,050 units, and output of 10,300 units. In both years, a = 0.2 in Equation (4). Calculate the level of TFP in both years and the growth rate of TFP from 2013 to 2014.