If the average worker produces $100,000 of GDP, by how much will GDP change if there are 150 million labor force participants and the unemployment rate changes from 6

Economics Aug 31, 2020

If the average worker produces $100,000 of GDP, by how much will GDP change if there are 150 million labor force participants and the unemployment rate changes from 6.0 to 5.5 percent?

GDP will increase

by ??? billion

Expert Solution

Labor force in the economy= 150 million

Unemployment rate= 6%

No. of unemployed= 150 million* 6%

= 9 million

Now, Unemployment rate= 5.5%

No. of unemployed= 150 million* 5.5%

= 8.25 million

Decrease in no. of unemployed people= 9 million- 8.25 million

= 750000 people

Increase in GDP= Production of average worker* Newly employed person

= 100000* 750000

= 75 billion

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