5. Suppose an economy is characterized by the equations below: Price setting: P= (1+ m\W/A) Wage setting: W = A°P'(1– u) Write down an expression for the equilibrium unemployment rate if P = P but A does not necessarily equal A. Now suppose that expectations of both prices and productivity are accurate. If the markup (m) is equal to 5%, the natural rate of unemployment is

5. Suppose an economy is characterized by the equations below: Price setting: P= (1+ m\W/A) Wage setting: W = A°P'(1– u) Write down an expression for the equilibrium unemployment rate if P = P but A does not necessarily equal A. Now suppose that expectations of both prices and productivity are accurate. If the markup (m) is equal to 5%, the natural rate of unemployment is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the figures below to answer the following question(s): P₁ P3 0 X3 X₁ X₂ Qp Real Output Graph A Profits to decrease AS₁ X₂ ASLR Product prices to decrease ут X Qp Real Output Graph B AS₂ AS₁ In Graph A above, an increase in the price level from P₁ to P₂ will cause: AS 3 The nation's unemployment rate to be greater than the natural rate of unemployment The nation's unemployment rate to be less than the natural rate of unemployment
on January 1, 2019, South Africa's first-ever national minimum wage came into effect. The legislation stipulated a minimum national rate of R20 per hour, or R3500 per month, depending on the number of hours worked. Some economists warned that it may depress SA's already high unemployment rate further by making it more expensive to hire workers. Using your knowledge of basic economic theory, illustrate and explain with the aid of a graph why some economists might have given such a warning?
In response to the covid-19 pandemic, many governments responded by an economic stimulus package to mitigate the negative impact of the pandemic on affected families. Changes in economic policies will frequently have an impact on the unemployment rate. Explain whether each of the policy changes described is likely to: (1) affect frictional or structural unemployment and (2) increase or decrease the measured unemployment rate.a) An increase in the number of weeks of employment insurance that unemployed workerscan receive. b) An increase in the minimum wage rate a) The government introduced new job-training programs to help people who lost their jobs in the affected sectors switch to other sectors.
In a study of the determinants of regional unemployment rates using pooled cross sections, the coefficients of the year dummies may reveal: Your answer: O there is no economic information that can be retrieved from these coefficients. O regional effects, which affect all cities equally, as long as they are a member of that region. O attitude differences towards unemployment between regions. macroeconomic effects, which affect all regions equally in a given year.
Answer both parts. (a) For any given job, how do the economy-wide labour market conditions affect a worker's bargaining power? Explain which labour market variable you would look at to assess labour market conditions. (b) Suppose that for given labour market conditions, worker bargaining power throughout the economy increases. Discuss, using diagrams, what effect this would have on the real wage and levels of unemployment and output in the short run and in the medium run.
Suppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will . The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply. O Improving a widely used job-search website so that it matches workers to job vacancies more effectively O Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks O Increasing the benefits offered to unemployed workers through the government's unemployment insurance program
Label the following statement as true or false: A permanent, large increase in the price of oil reduces the natural rate of unemployment Select one: True False
As businesses reopen after the shut down response to the Covid virus, the unemployment rate is exceptionally high and the economy is likely producing far below its potential. Identify a policy that may help lift the economy out of this slump. Present an analysis where you explain the impact you expect from your policy on output, prices, wages, employment, and unemployment.
10 DRAW A GRAPH. WITHOUT GRAPH THUMBS DOWN!Suppose the markup of goods prices over marginal cost is 2% and the wage-setting equation is W=P(1-u) with u being the unemployment rate.1. What is the Natural level on Unemployment?2. What is the real wage as determined by the price setting equation?3. If the markup increases to 2.5% due to an increase in the price of Oil what happens to the natural rate of employment? Explain briefly and graphically this change.
Month/Yr Sep/2020 Cyclical Rate of Unemployment (percent) 3.5 Suppose it is claimed that actual real GDP deviates from potential real GDP by 2% for every percentage point of cyclical unemployment. In other words, assume that actual real GDP falls below (or rises above) potential real GDP by 2% when the rate of unemployment rises above (or falls below) the natural rate of unemployment by 1%. Given the cyclical unemployment rate recorded above, this translates into actual real GDP deviating from potential real GDP by $ billion. (Enter your response rounded to one decimal place and use a minus sign if necessary. If actual GDP is below potential GDP, enter your answer as a negative value.)
Scenario 1. Assume that frictional unemployment is 25; structural unemployment is 50; cyclical unemployment is 150; discouraged workers = 75; employed workers = 750; underemployed workers = 200. Use this information to answer the following 5 questions.Refer to Scenario 1. Is the economy at full employment? Question 15 options: a) Yes, because the unemployment rate is below 10% b) No, because the unemployment rate exceeds the natural rate of unemployment c) No, because cyclical unemployment exists in the economy d) Answers B and C are both correct
The labour market in an economy is characterised by the following equations: Wage setting: Price setting: W p² W Р = 0.9-0.5u = 1 1+µ -A In which W is nominal wages, pe and P are expected nominal prices and nominal prices, respectively, u is level of unemployment. µ is the price mark-up and λ is the marginal product of labour. Assume μ = 0.3 and λ = 1.1 Considering this information, which of the following statements are CORRECT: Improvement in working conditions will have no effects in the equilibrium level of unemployment in this economy. If this economy's actual output is below its potential output, there is pressure for real wages to decrease below 0.85 (i.e., W<0.85). If price marginal product of labour decreases to 1, the equilibrium real wage in this economy will decrease. A positive demand shock will change the equilibrium variables in this economy.