The connection between macroeconomics and microeconomics

While economists measure unemployment at the macroeconomic level, microeconomic forces are often responsible for this macro aggregate. In other words, the tie between microeconomics and macroeconomics is inevitable when discussing the level of unemployment in an economy.

Suppose the following graph represents the market for unskilled labor in a fictional economy. These workers typically represent the young, inexperienced, or uneducated part of the labor force and are therefore most effected by changes in the unemployment rate.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

Before tax credit Graph Input Tool 15 Labor Market Labor Supply Wage Rate 12 (Dollars per hour) $9.9 Labor Demanded 340 Labor Supplied (Thousands of 660 (Thousands of workers) workers) 9 Surplus Labor WAGE (Dollars per hour) Thousands of 320 workers) 6 Labor Demand Labor Demand Shifters 3 Tax Credit (Dollars per hour) 0 0 0 200 400 600 800 1000 QUANTITY (Thousands of workers)After tax credit WAGE (Dollars per hour) 15 - Labor Supply 12 g + + 9 N Jgn I\\ i 1/ \\I 6 } .\"I; 1 I .p 4 1 1 L,DZ 3 . I I N\\ : 1 i ; 1 I \\ o L+ 1+ 0+ 0 200 400 600 800 1000 QUANTITY (Thousands of workers) Graph Input Tool Labor Market [1 Wage Rate $9.9 (Dollars per hour) . Labor Demanded Labor Supplied (Thousands of 20016667 (Thousands of workers) workers) Surplus Labor 253.3333 (Thousands of workers) Labor Demand Shifters Tax Credit 1 (Dollars per hour) 660 At a minimum wage of $9.90 per hour, the unemployment rate among unskilled workers is approximately v . True or False: With a minimum wage of $9.90, unemployment of unskilled workers is higher with the tax credit versus without it. True False \fIf the wage is not allowed to fall below $9.90 per hour, the size of the unskilled labor force is workers, and unskilled workers are considered unemployed