Question

In this​ question, we will use what you learned in the second part of the chapter to compare the performance of an economy in two different time​ periods, as its physical capital stock and efficiency units of labor change. Suppose that from period 1 to period​ 2, the unemployment rate in the economy increases. Everything else remains unchanged. The total efficiency units of labor will ________ because _________.

Answer 1

The total efficiency units of labor will decrease because the number of employed workers is less.

Step-by-step explanation:

We are asked to compare the total efficiency units of labor from two different periods in an economy. Efficiency units of labor can be calculated by taking the number of workers in the economy and multiplying that with the efficiency of each one.

Since we are told that the unemployment rate increases between period 1 and 2, we can say that the total efficiency units of labor is going to decrease because the total number of workers decrease due to the increase in unemployment numbers.

I hope this answer helps.