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  3. 3 consider an economy that initially has a labor force...

Question: 3 consider an economy that initially has a labor force...

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3. Consider an economy that initially has a labor force of 4000 workers. Of these workers, 3000 are employed . The economy enters a recession. The total number of employed workers falls by 10%, and in addition 1% of the labour force become discouraged at the prospect of finding a job and stop searching for a job for more than 4 weeks Can you calculate the employment rate given the information above? Explain. Calculate the unemployment rate before, and after, the recession. Are you able to calculate the labour force participation rate given the information above? Explain. a) b) c) d) What is the unemployment rate accounting for discouraged workers? e) Using Okuns law, as given in class, calculate the expected percentage change in real GDP due to the recession.

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