Case study/ unemploymentPaper details:
1. Assume that, in the population, 95 million people worked for pay last week, 5 million people did not work for pay but had been seeking a job, 5 million people did not work for pay and had not been seeking a job for the past several months, and 45 million were under age 16.
a. What is the rate of unemployment in the above scenario?
b. What will be the rate of unemployment if 20 million people did not work for pay but had been seeking a job?
c. Comment upon the prospects of economy and business opportunities in this country in both scenarios?
d. Put forward good suggestions to the Ministry of Economy of the country.
2. Consider three consumer goods: 100 of Good A, 100 of Good B, and 100 of Good C. In the base year / last year, Good A was sold at a price of $1, Good B sold at a price of $1, and Good C sold at a price of $1. In the current year, Good A sold at a price of $3, Good B sold at a price of $5, and Good C sold at a price of $10.
a. What is the CPI / Current Price Index?
b. What is the justification of such a rise in price of goods in general and what would be the impact of such rise in CPI on economy and business?
c. If you are a businessman, what would be your thoughts for business investment in such an economy and why do you think so?
3. At an income of ADE 100,000, Ali spent ADE 90,000 on consumer goods. When Ali’s income rose to ADE 200,000, Leo spent ADE 160,000 on consumer goods.
a. Calculate Ali’s marginal propensity to consume.
b. Comment upon the impact of marginal propensity to consume in an economy in general and the UAE economy and business in particular.