Consider an economy that initially has a labor force of 2000 workers. Of these workers, 1500 are employed . The economy enters a recession. Employment falls by 5%, and in addition 0.4% of the labor force becomes discouraged at the prospect of finding a job and leaves the labor force.

a) Can you calculate the employment rate given the information above? Explain.

b) Calculate the unemployment rate before and after the recession.

c) What is the unemployment rate taking discouraged workers into account?

d) Using Okun's law, calculate the expected percentage change in real GDP.