Macroeconomics2Part 5: Unemployment is that proportion of the labor force without jobs, actively seeking, and available for a job (Amadeo, 2018). The total population = unemployed + employed + those not in labor force = 500+8000+4000 = 12500. Labor force = Employed + unemployed = 8000+500 = 8500. Unemployment rate = unemployedlaborforce = 5008500∗100 = 5.88%. Participation rate = Laborforcetotalpopulation= = 850012500∗100 = 68%.Part 6: Basket’s cost in 2005 = PQ= PQ Computers + PQ Books + PQ Burgers= (1700*2) + (25*50) + (1.00*150) = $4800Basket’s cost in 2015 = PQ= (1200*2) + (30*50) + (2.00*150) = $4200CPI 2005 base year = 48004800∗100=100%CPI 2015 base year = 42004800∗100=87.5%Following an explanation by Jan (2015), there was a decrease in CPI meaning that the cost of living in 2015 was lower than that in 2005. The price decreased by 12.5%.Task 7Part 1: The first reason for downward sloping of AD curve is Pigou's wealth effect where a reduction in price makes consumers wealthier and their spending increase. The second reason is Keynes's interest-rate effect where consumers demand money depending on the price level. A lower price induces consumers to save more as less money is required to make purchases. More saving increases the supply of loan driving down the interest rate and consequently an increase inaggregate demand. Thirdly, Mundell-Fleming's exchange-rate effect where AD rises as net export rise being stimulated by lower domestic interest rate resulting from falling prices.Part 2: Pessimism will lower the aggregate demand since people will change their consumption to be lower so as to enable them to save some income that they will be able to make demand during

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