The Dominican Republican economy can be classified as the seventh largest economy in the Latin America and hosts the site of the single largest gold mine in Latin America. Assume there are 20,000 people 14 years or older who can be classified as:

4,000 are currently working part-time and are satisfied with their jobs;

2,000 are currently working part-time and want to work full-time;

10,000 are working full-time;

1,000 are discouraged workers; and

The rest of this population is currently not working, but actively looking for work and available for work.

a. Calculate the current unemployment rate in Dominican Republic. (2 marks)

Assume you and three of your classmates are hired by the Young Economic Advisors (YEA) as young economics consultants. The Chairman of the firm approaches you and say that she believes the current unemployment rate is too high but things can change.

b. What do you recommend that the current government administration do to increase output by $300 million if it is estimated that the MPC is 0.8 (2 marks)