Answer to Question #98556 in Microeconomics for Rose

Question

If the average worker produces $100,000 of GDP, by how much will GDP increase if there are 150 million in the labor force and unemployment falls from 6.0% to 5.5%?

Answer 1

If there are 150 million in the labor force and unemployment falls from 6.0% to 5.5%, then the number of employed will increase by 150×0.005 = 0.75 million or 750,000.

So, GDP will increase by 750,000×100,000 = $75 billion.