CAPÍTULO 3: Diseño, ejecución y evaluación de las pruebas
3. Introducción
3.1 Diseño de los casos de pruebas
3.1.2 Pruebas de Aceptación (validación)
437
ECONOMIC ANALYSIS
The news article reports and comments on several aspects of the labour market during September 2011.
The state of the labour market depends on the performance of the economy, as described by real GDP.
Figure 1 shows the path of real GDP from September 2008 to September 2011.
In 2008, a global financial crisis brought a slowdown of economic growth in Asia and recession in America and Europe. Australian real GDP fell for only one quarter but took until the June quarter 2009 to surpass the level previously attained in September 2008.
Real GDP then grew from the June quarter 2009 to the December quarter 2010.
In the March quarter 2011, a new European financial crisis slowed the global economic growth rate and brought fears of another recession. Natural disasters (cyclone Yasi and widespread flooding) also influenced Australian real GDP. The combined effect of these factors shrank real GDP again.
When real GDP is expanding, employment grows.
When real GDP shrinks, employment stops growing.
Figure 2 shows how employment responded to real GDP between September 2008 and September 2011.
During the global financial crisis of 2008, employment was roughly constant for a full year. Employment growth resumed in October 2009 and remained strong until November 2010 when it slowed again to a near standstill.
When employment grows more slowly than the labour force, the unemployment rate rises; when employment grows at a faster rate than the labour force, the unemployment rate falls.
Figure 3 shows the effects of real GDP growth and employment growth on the unemployment rates of Australia, Queensland and Western Australia.
The Australian unemployment rate rose to 5.9 per cent in June 2009 and then gradually decreased.
The change in the unemployment rate was uneven across the states. The Western Australian rate fell faster than the Australian rate, while the Queensland rate first increased and then barely fell at all.
As noted in the news article, a resources boom in Western Australia increased employment but not enough people were willing to move there, so the unemployment rate fell.
Figure
Figure 2 2 EmploymentEmployment
Queensland
Figure 3 3 UnemploymentUnemployment Global
In other states, and even in resource-rich Queensland, the growth in employment was insufficient to lower the unemployment rate. This unemployment is structural.
438 CHAPTER 19 Monitoring Jobs and Inflation
Over the business cycle, real GDP fluctuates around potential GDP and the unemployment rate fluctuates around the natural unemployment rate.
Working Problems 5 to 11 will give you a better understanding of unemployment and full employment.
The Price Level, Inflation and Deflation The Price Level, Inflation and Deflation(pp. 430–35)
Inflation (or deflation) is a problem because it redistributes income and wealth and diverts resources from production.
The Consumer Price Index (CPI) is a measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services.
The CPI is defined to equal 100 for a reference base period – currently 1989/90.
The inflation rate is the percentage change in the CPI from one period to the next.
Changes in the CPI probably overstate the inflation rate because of the bias that arises from new goods, quality changes, commodity substitution and outlet substitution.
The bias in the CPI distorts private contracts and increases government outlays.
Alternative price level measures avoid the bias of the CPI but do not make a large difference to the measured inflation rate.
Real economic variables are calculated by dividing nominal variables by the price level.
Working Problems 12 to 20 will give you a better understanding of the price level, inflation and deflation.
Key Points Key Points
Employment and Unemployment Employment and Unemployment(pp. 422–26)
Unemployment is a serious personal, social and economic problem because it results in lost output and income and a loss of human capital.
The unemployment rate averaged 6.5 per centbetween 1971 and 2011. It increases in recessions and decreases in expansions.
The labour force participation rate and the employment-to-population ratio have an upward trend and fluctuate with the business cycle.
The broader extended underutilisation rate of labour is more than twice the unemployment rate.
Long-term unemployment spells – 52 weeks or longer – have trended downward.
Working Problems 1 to 4 will give you a better understanding of employment and unemployment.
Unemployment and Full
Unemployment and Full EmploymentEmployment(pp. 427–29)
Some unemployment is unavoidable because people are constantly entering and leaving the labour force and losing or quitting jobs; also firms that create jobs are constantly being born, expanding, contracting and dying.
Unemployment can be frictional, structural or cyclical.
When all unemployment is frictional and structural, the unemployment rate equals the natural unemployment rate, the economy is at full employment, and real GDP equals potential GDP.
SUMMARY SUMMARY
Key Terms Key Terms
Chain price index for HFCE, 434 Consumer Price Index (CPI), 431 Core inflation rate, 435 Cyclical unemployment, 427 Deflation, 430
Discouraged worker, 426 Employment-to-population ratio, 424 Frictional unemployment, 427 Full employment, 427 GDP deflator, 434 Hyperinflation, 430
Inflation, 430 Labour force, 423
Labour force participation rate, 425 Marginally attached worker, 426 Natural unemployment rate, 427 Output gap, 428
Price level, 430
Structural unemployment, 427 Underemployed worker, 425 Unemployment rate, 424 Working-age population, 423
Study Plan Problems and Applications 439
When Golden Circle closes its Brisbane beetroot canning plant and lays off the workers employed there and stops buying from Lockyer Valley growers, what happens to frictional, structural and cyclical unemployment; and what happens to the natural unemployment rate?
Use the following news clip to work Problems 6 to 8.
Economic Conditions in Recession
From 2008 to 2009, the unemployment rate rose from 5.7 per cent to 7.6 per cent; the
underemployment rate increased from 5.7 per cent to 7.6 per cent; and the marginal attatched worker rate increased from 1 per cent to 1.2 per cent.
Source: ABS, Cat. No. 6105 6. Were these changes in the labour market most
likely a sign of increased structural problems or were they increases in cyclical unemployment?
7. What happened to the underutilisation rate of labour between 2008 and 2009?
8. What happened to the extended underutilisation rate of labour between 2008 and 2009?
Use the following news clip to work Problems 9 and 10.Unemployment and Job Vacancies Rise
The number of job vacancies in Australia rose 3.2 per cent in the three months to August 2011, official statistics show. The number of job vacancies in the private sector was 170,000 in August, a rise of 4.1 per cent from 163,300 in May. There were 17,100 vacancies in the public sector in August, down 4.4 per cent from vacancies recorded three months earlier. Over the same three months, the
unemployment rate increased from 5 per cent to 5.3 per cent.
Sources: News.com.au, 29 September 2011 and ABS 9. If the labour market is working properly, why are
there job vacancies and unemployment? Why don’t all the job vacancies get filled by unemployed workers?
10. Are the additional workers who couldn’t find jobs in the three months to August 2011 most
likely part of the economy’s structural unemployment or part of its cyclical unemployment? Explain your answer.
Employment and Unemployment
Employment and Unemployment(Study Plan 19.1) 1. The ABS reported the following data for
Australia in November 2011:
Labour force: 12,092,900 Employment: 11,457,100
Working-age population: 18,462,440 Calculate the
a. Unemployment rate.
b. Labour force participation rate.
c. Employment-to-population ratio.
2. In July 2012, in the economy of Sandy Island, 10,000 people were employed, 1,000 were unemployed, and 5,000 were not in the labour force. During August 2012, 80 people lost their jobs and didn’t look for new ones, 20 people quit
their jobs and retired, 150 unemployed people started a job, 50 people quit the labour force, and 40 people entered the labour force to look for work. Calculate for July 2012
a. The unemployment rate.
b. The employment-to-population ratio.
And calculate for the end of August 2012 c. The number of people unemployed.
d. The number of people employed.
e. The unemployment rate.
Use the following information to work Problems 3 and 4.
In September 2008, the Australian unemployment rate was 4.3 per cent. In August 2009, the unemployment rate was 5.8 per cent. Predict what happened to
3. Unemployment between September 2008 and August 2009, assuming that the labour force was
constant.
4. The labour force between September 2008 and August 2009, assuming that unemployment was
constant.
Unemployment and Full
Unemployment and Full EmploymentEmployment(Study Plan 19.2) 5. Beetroot Growers Plan Future Beyond Canning Golden Circle is closing its beetroot processing
plant in Brisbane in favour of a facility in New Zealand. Nine farmers had been supplying the plant from the Lockyer Valley.
Source: ABC Queensland, 1 June 2011 My
MyEconEconLabLab You can work Problems 1 to 20 in MyEconLab Chapter 19 Study Plan and get instant feedback.
STUDY PLAN PROBLEMS
STUDY PLAN PROBLEMS AND APPLICATIONS AND APPLICATIONS
440 CHAPTER 19 Monitoring Jobs and Inflation
11. Which of the follow ing people are unemployed because of labour market mismatching?
Michael has unemployment benefits of $450 a week and he turned down a full-time job paying $7.75 an hour.
Tory used to earn $60,000 a year and he turned down a low-paid job to search for one that pays at least $50,000 a year.
David turned down a temporary full-time job paying $15 an hour because it was an hour’s drive away and the petrol cost would be high.
The Price Level, Inflation and Deflation
The Price Level, Inflation and Deflation(Study Plan 19.3) Use the following information to work Problems 12 and 13.
The people on Coral Island buy only juice and cloth.
The CPI basket contains the quantities bought in 2009. The average household spent $60 on juice and $30 on cloth in 2009 when the price of juice was
$2 a bottle and the price of cloth was $5 a metre. In the current year, 2010, juice is $4 a bottle and cloth is $6 a metre.
12. Calculate the CPI basket and the percentage of the household’s budget spent on juice in 2009.
13. Calculate the CPI and the inflation rate in 2010.
Use the following data to work Problems 14 to 16.
The Lucky Country reported the following CPI data:
June 2010 201.9 June 2011 207.2 June 2012 217.4
14. Calculate the inflation rates for the years ended June 2011 and June 2012. How did the inflation
rate change in 2012?
15. Why might these CPI numbers be biased?
16. How do alternative price indexes help to avoid the bias in the CPI numbers?
17. Inflation Can Act as a Safety Valve
Workers will more readily accept a real wage cut that arises from an increase in the price level than a cut in their nominal wage rate.
Source: FT.com, 28 May 2009 Explain why inflation influences a worker’s real wage rate. Why might this observation be true?
18. The IMF World Economic Outlook reported the following price level data (2000=100):
R
Reeggiioonn 20200066 22000077 22000088 United States 117.1 120.4 124.0
Euro area 113.6 117.1 119.6
Japan 98.1 98.1 98.8
a. In which region was the inflation rate highest in 2007 and in 2008?
b. Describe the path of the price level in Japan.
19. CPI Report
The Consumer Price Index (CPI) rose 0.6% in the September quarter 2011, compared with a rise of 0.9% in the June quarter 2011. The most significant price rises in the September quarter 2011 were for electricity (+7.8%), international holiday travel and accommodation (+5.1%), rents (+1.2%), water and sewerage (+8.6%) and property rates and charges (+5.2%). The most significant offsetting price falls were for pharmaceutical products (–5.0%), audio, visual and computing equipment (–3.3%), automotive fuel (–1.4%), vegetables (–2.5%), motor vehicles (–1.0%) and fruit (–1.2%).
Source: ABS Media Release, 26 October 2011 Did the inflation rate increase, decrease or remain the same in the September quarter of 2011? In your answer, distinguish between the CPI and the core CPI. Why might the core CPI be a useful measurement and why might it be misleading?
20. Dress for Less
Since 1998, luxury fashion has become more expensive while mainstream apparel has become markedly less expensive. Clothing is one of the few categories in the CPI in which overall prices have declined – about 10 per cent – since 1998.
Source: The New York Times , 29 May 2008 If luxury clothing prices have increased dramatically since the late 1990s, why has the clothing category of the CPI actually declined by about 10 per cent?
Additional Problems and Applications 441
Employment and Unemployment Employment and Unemployment
21. What is the unemployment rate supposed to measure and why is it an imperfect measure?
22. ABS reported the following data for October 2011:
Labour force participation rate: 65.6 per cent Working-age population: 18,429,726
Employment-to-population ratio: 62.2 Calculate the
a. Labour force.
b. Employment.
c. Unemployment rate.
23. In New South Wales in October 2011, the labour force was 3,803,200 and 200,500 people were unemployed. In November 2011, the labour force decreased by 300 and the number employed increased by 2,900. Calculate the unemployment rate in October 2011 and in November 2011.
24. The ABS reported the following data for Victoria in October and November in 2011: The unemployment rate increased from 5.4 per cent to 5.5 per cent. The employment-to-population ratio decreased from 62.2 per cent to 62 per cent and the labour force participation rate decreased from 65.8 per cent to 65.6 per cent.
a. Did the number employed change by more than the change in the number unemployed?
How can you tell?
b. If the number employed did change by more than the change in the number unemployed, what happened to the number of marginally
attached workers?
25. A high unemployment rate tells us that a large percentage of the labour force is unemployed, but it doesn’t tell us how much labour is underutilised. What extra information would tell us if (i) people are working fewer hours than they would like, and (ii) more people are discouraged workers?
26. How would an increase in unemployment benefits influence the cost of unemployment and would it make it easier for firms that seek to hire
more labour?
27. Why might the unemployment rate underestimate the underutilisation of labour resources?
Unemployment and Full
Unemployment and Full Employment Employment
Use the following data to work Problems 28 to 30.
The IMF World Economic Outlook reports the following unemployment rates:
R
Reeggiioonn 22001100 22001111
United States 9.6 8.5
United Kingdom 7.8 7.7
Japan 5.1 4.9
28. What do these numbers tell you about the phase of the business cycle in the United States, the United Kingdom and Japan in 2011?
29. What do these numbers tell us about the relative size of the natural unemployment rates in the United States, the United Kingdom and Japan?
30. Do these numbers tell us anything about the relative size of the labour force participation rates and employment-to-population ratios in the three regions?
31. A Half-Year of Job LossesU.S. employers trimmed jobs in June for the sixth straight month, with the total for the first six months at 438,000 jobs lost. The job losses in June were concentrated in manufacturing and
construction, two sectors that have been badly battered in the recession.
Source: CNN, 3 July 2008 a. Based on the news clip, what might be the
main source of increased U.S. unemployment?
b. Based on the news clip, what might be the main type of increased U.S. unemployment?
32. It has been suggested that the government should charge higher import duties on companies that deliberately close operations in Australia, causing job losses in factories and farming.
a. What type of unemployment would such a tax avoid? Explain your answer.
b. How might the recommended policy influence Victoria’s natural unemployment rate? Explain your answer.
My
MyEconEconLabLab You can work these problems in MyEconLab if assigned by your instructor.
AD
ADDI DITI TIO ONA NAL L PR PRO OBL BLEM EMS S AN AND D A APP PPLI LICAT CATIION ONSS
442 CHAPTER 19 Monitoring Jobs and Inflation
The Price Level, Inflation and Deflation The Price Level, Inflation and Deflation
33. A typical family on Sandy Island consumes only juice and cloth. Last year, which was the base
year, the family spent $40 on juice and $25 on cloth. In the base year, juice was $4 a bottle and cloth was $5 a length. This year, juice is $4 a bottle and cloth is $6 a length. Calculate a. The CPI basket.
b. The CPI in the current year.
c. The inflation rate in the current year.
34. Amazon agreed to pay its workers $20 an hour in 1999 and $22 an hour in 2001. The price level for these years was 166 in 1999 and 180 in 2001.
Calculate the real wage rate in each year. Did these workers really get a pay increase between 1999 and 2001?
35. News Release
Real personal expenditure on consumption goods and services in 2008/09 chained dollars was
$181,463 million in 2010 and $188,293 million in 2011. Personal expenditure on consumption goods and services in current dollars was $184,669 million in 2010 and $195,762 million in 2011.
(All the data are for the September quarter.) Source: ABS a. Calculate the chain price index for household
final consumption expenditure (HFCE) for 2010 and 2011.
b. Calculate the HFCE inflation rate for 2011.
c. Why might the HFCE inflation rate be preferred to the CPI inflation rate?
d. Did real household final consumption expenditure increase by more or by less than the increase measured in current dollars?
Why?
Economics in the News Economics in the News
36. After you have studied Reading Between the Lines on pp. 436–37, answer the following questions:
a. What are the key features of the performance of the Australian job market during August 2011?
b. How do the employment data line up with the real GDP data?
c. Why might the unemployment rate in Queensland exceed that in Western Australia?
d. Do you think that the differences in the unemployment rates across the states reflects differences in frictional, structural or cyclical unemployment?
37. Out of a Job and Out of Luck at 54 Too young to retire, too old to get a new job.
That’s how many older workers feel after being made redundant and spending time on the unemployment line. Many lack the skills to craft resumes and search online, experts say. Older workers took an average of about 5 weeks longer
than younger people to land a job. ‘Older workers will be more adversely affected because
of the time it takes to transition into another job,’ said Deborah Russell, AARP’s director of workforce issues.
Source: CNN, 21 May 2008 a. What type of unemployment might older
workers be more prone to experience?
b. Explain how the unemployment rate of older workers is influenced by the business cycle.
c. Why might older unemployed workers become marginally attached or discouraged workers during a recession?
Data Graphing Data Graphing
Use the Data Grapher in MyEconLab to work Problems 38 to 40.
38. In which country in 2010 was the unemployment rate highest and in which was it lowest: Australia, Japan, France or the United States?
39. In which country in 2010 was the inflation rate highest and in which was it lowest: Australia, Japan, France or the United States?
40. Make a scatter diagram of Australian inflation and unemployment. Describe the relationship.
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