ANSWERS TO END-OF-CHAPTER PROBLEMS
CHAPTER 1
Quick Check
1. a. True.
2. a. More flexible labor market institutions may lead to lower unemployment, but there are questions
b. Although the Euro will remove obstacles to free trade between European countries, each country
Dig Deeper
3 a. 17.4(1.022)t=10.4(1.065)t
b. No. At current growth rates, total Chinese output will exceed U.S. output within 9 years, but
c. China has increased the amount of capital per person. This is possible in the United States.
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4. a. When the value of the level of output per hour increases from 100 in 2009 to 103.2 in 2010, the
b. The decade average growth rates are: 1970-79, 1.9%; 1980-89, 1.5%; 1990-99, 2.1%; 2000-2009,
c. This answer will vary with the issue of the Economic Report of the President used.
Explore Further
5. a/c. As of February 2015, there had been 6 occasions since 1960, quarter 2, with two consecutive
quarters of negative economic growth. There are many quarter of negative economic growth.
6. a-b.Behavior of the unemployment rate over the 6 recessions above
Recession
(year and
quarter)
Unemployment
Rate in month
prior to
recession
quarter
Unemployment
rate in month
at end of
recession
quarter
Change over
recession
Unemployment
rate peak after
recession
Change from
before
recession to
peak month
1969:4-1970:1 3.5 4.4 0.9 6.1 (Dec. 1970) 2.6
©2017 Pearson Education, Inc.
115
©2017 Pearson Education, Inc.
116