Assume that the labor force is a constant fraction of the total population. In particular, assume where e is called the "labor force participation rate" and is a constant number between 0 and 1 (assume it can be 1)[1]. In the USA, the labor force participation rate is 63.3% (i.e., ) and the total population is approximately 327 million people (i.e., ). US population growth is 0.7%. i. Calculate the US labor force, L. ii. Calculate the growth rate of the US labor force. iii. Assuming the US had a simple linear production function, what would be the growth rate of GDP? iv. Assuming the US had a production function with diminishing returns and (which is the actual US “labor share of production"), what should be US GDP growth rate just based on population growth?

Assume that the labor force is a constant fraction of the total population. In particular, assume where e is called the "labor force participation rate" and is a constant number between 0 and 1 (assume it can be 1)[1]. In the USA, the labor force participation rate is 63.3% (i.e., ) and the total population is approximately 327 million people (i.e., ). US population growth is 0.7%. i. Calculate the US labor force, L. ii. Calculate the growth rate of the US labor force. iii. Assuming the US had a simple linear production function, what would be the growth rate of GDP? iv. Assuming the US had a production function with diminishing returns and (which is the actual US “labor share of production"), what should be US GDP growth rate just based on population growth?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 1P

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