Answer to Question #173674 in Microeconomics for Ash

Question

If the average worker produces $55,000 of GDP, by how much will GDP change if there are 120 million labor force participants and the unemployment rate changes from 9.0 8.0 percent?

Answer 1

number of unemployed persons at 9 percent$=$ labor force$\times$ unemployment rate$=120million\times0.09=10.8million$

At 8 percent, number unemployed$=120million\times0.08=9.6million$

change in unemployed persons$=10.8million-9.6million=1.2million=1,200,000$

Increase in GDP$=$ production of average worker$\times$ newly employed persons$=55,000\times 1,200,000=\$66 billion$