Econ 115: Tutorial #3

Simon Fraser University

Joshua F. Boitnott, PhD

1. Let’s consider the effect of inflation in an economy comprising three people: Bob (a
bean farmer), Rita (a rice farmer), and Xiao (a wheat farmer). Suppose all three
people consume the goods in equal amounts (as a burrito).

In 2018, the price of beans was $1, the price of rice was $3, and the price of wheat was
$2.

(a) Suppose that in 2019, the price of beans was $2, the price of rice was $6, and
the price of wheat was $4. What was the inflation rate? Are any of the farmers
better off? Are any of the farmers worse off? Explain.
(b) Instead suppose that in 2019, the price of beans was $2, the price of rice was
$4, and the price of wheat was $3. What was the inflation rate? Are any of the
farmers better off? Are any of the farmers worse off? Explain.
(c) The third alternative is that in 2019, the price of beans was $2, the price of rice
was $3, and the price of wheat was $1. What was the inflation rate? Are any of
the farmers better off? Are any of the farmers worse off? Explain.

2. The following question deals with the labour force in canada. Below is a table 1 with
data on the population (15+), those in the labour force, and those with employment
in Canada for October, November, and December of 2019.

Table 1: Canada Labour Data

Data in thousands
Month/Year
Population (15+) Labour Force Employment
Oct. 2019 30,896.0 20,286.0 19,163.4
Nov. 2019 30,932.8 20,286.5 19,092.2
Dec. 2019 30,964.7 20,270.1 19,127.4

(a) What is the labour force partipation rate in Canada for October, November, and
December of 2019?
(b) What is the unemployment rate in Canada for October, November, and December
of 2019?
 (c) The labour force participation rate in December of 2021 was 65.3% while the
unemployment rate was 5.9%. What does this suggest about the long run effects
to employment?

Table 2: Keynesberg Age-Employment Table

Looking Want a Do not want
Full-time Part-time for a job, but given a job and
Age Workers Workers job up looking not looking Total

0-15 0 0 0 0 300 300

16-24 150 500 50 100 200 1,000

25-54 800 450 200 125 650 2,225

55+ 100 75 25 50 550 800

Total 1,050 1,025 275 275 1,700 4,325

3. The data for the small town of Keynesberg in EconoLand comes from a census done
by the Statistics Authority shown in Table 2. Assume that 16+ (instead of 15+) is
the age the statistics agency begins counting people as part of the adult population.
It includes information on all of the residents of the town. Given this information,
answer the following questions:

(a) What is the Labour Force here?

(b) What is the Labour Force Participation Rate here?
(c) What is the unemployment rate for Keynesberg?
(d) What is youth (16-24) unemployment here?
(e) How many discouraged workers are there? How much would the unemployment
rate increase if included?