Economic

1. What is the labor theory of value? How did Marx use the labor theory of value to understand the creation of surplus value and capital accumulation?

From the textbook, I learned that the labor theory of value is the value of any commodity is ultimately derived from the labor used to create it.

Marx contended that the value of all goods and services is a function of the labor that went into them, including the direct and indirect labor embodied in raw materials and capital goods.

The creation of surplus value means that workers are paid by capitalists to produce goods and services. But, because the capitalists control the productive process and final output, they will earn surplus value. Surplus value is the difference between the revenue people generated for the company and the wage they receive.

According to Marx, the capital accumulation can be explain as since the capitalists derive surplus value and the profits from productions, and since they are operating in such a competitive market environment where other capitalists also want to earn profits from the same type of activity or products, they are forced to accumulate the capital. So, we can say the capital accumulation is the driving force of capitalism.

2. Dose the government's treatment of discouraged workers in deriving official unemployment rates tend to lead to an under-or overstatement of employment? What about its treatment of underemployed workers? Explain your answers

In my opinion, the government’s treatment of discouraged workers in deriving official unemployment rate tends to lead the understatement of unemployment.

Because the unemployment rate is measured as a percentage of the labor force, an individual is not technically counted as unemployed if she has gotten frustrated with looking for a job and has given up on trying finding work. These "discouraged workers" would, however, probably take a job if it came along, which implies that the official unemployment rate...