Exhibit 20-1

-According to the data in Exhibit 20-1, if economic conditions change such that the unemployment rate declines to 4.5 percent, what is the new value of aggregate hours?

Question

Exhibit 20-1
 
-According to the data in Exhibit 20-1, if economic conditions change such that the unemployment rate declines to 4.5 percent, what is the new value of aggregate hours?

Quizplus · Accepted Answer

From Exhibit 20-1, we can see that when the unemployment rate is at 5%, aggregate hours equal 220 billion hours per year. As the economy improves and the unemployment rate declines to 4.5%, we can use the linear regression equation in the exhibit to estimate the new value of aggregate hours:

Aggregate hours = (207.5 × labor force) - 491

Assuming the labor force remains the same, we can plug in the new unemployment rate:

Aggregate hours = (207.5 × labor force) - 491
Aggregate hours = (207.5 × 150) - 491
Aggregate hours = 241 billion hours per year

Therefore, the new value of aggregate hours would be 241 billion hours per year. Hence, the correct choice is D.

Exhibit 20-1 -According to the Data in Exhibit 20-1, If Economic Conditions