Real wage5EmployedWage-setting curveWorkers (millions)Labour supplyLabour productivityAPrice-setting curve910UnemployedSuppose there is an increase in workers' bargaining power that causes inflation. Which of the following statement is NOT correct according to the above figure?○ Workers' bargaining power can increase due to an increase in unemployment benefits, resulting in a rise in the wage-setting curve.Workers' bargaining power can increase due to a decrease in the unemployment level along a given wage-setting curve.○ After the initial increase in the workers' bargaining power, the firms adjust the wages and prices by shifting the wage-setting curve, creating inflation.After the initial increase in the workers' bargaining power, the firms adjust the wages and prices, creating inflation. Neither the wage nor the price-setting curve shifts.

The objective of the question is to identify the incorrect statement about the effects of an…

Answered: Real wage 5 Employed Wage-setting curve…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is demand-deficient unemployment? a) Unemployment due to asymmetric information on the side of the employees. b) Unemployment due to skill mismatch between supply and demand of labour. c) Unemployment due to asymmetric information on the side of the employers. d) Unemployment due to insufficient demand in the economy to maintain full employment.
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. What is the size of the labor force? Question 12 options: a) 1175 b) 750 c) 975 d) 1250
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.
Firms in the country of Merka, which experiences varying levels of unemployment over time, face a very competitive labor market. Classify the given events according to how each would affect Merka's unemployment rate. Increase in the unemployment rate Decrease in the unemployment rate Answer Bank decreased unemployment benefits increase in the minimum wage introduction of employment-at-will doctrine increase in unions' influence
Suppose an economy is experiencing the following rates of unemployment by type. Rate (%) Cyclically Unemployed 4.3 Frictionally Unemployed 4.8 Structurally Unemployed 4.2 The actual unemployment rate is Multiple Choice 13.3 percent and the natural rate of unemployment is 9.0 percent. 15.5 percent and the natural rate of unemployment is 13.3 percent. 9.0 percent and the natural rate of unemployment is 13.3 percent. 13.3 percent and the natural rate of unemployment is 15.5 percent
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.
(a) Explain the difference between the nominal wage and the real wage. Using a wage setting curve and a price setting curve illustrate how the real wage determines the equilibrium level of employment in the economy. (b) On a new diagram use a wage setting curve and a price setting curve to illustrate the change to the equilibrium level of employment if there is a reduction in the degree of competition faced by firms. Clearly state what will occur to the real wage and the level of unemployment.
Link the below reasons for the existence of unemployment (left) with the relevant type of unemployment and unemployment theory (right): 1. Job seekers need time to learn about and find available jobs. This explains why unemployment and job vacancies are observed to coexist. a. Frictional unemployment the Job search model. b. Structural unemployment efficiency wage theory. c. Seasonal unemployment seasonal variation in the demand for workers (in certain sectors). d. Cyclical & seasonal unemployment reasons for downward wage rigidity. e. Cyclical unemployment the Job search model. f. Structural unemployment the Sectoral Shifts hypothesis. g. Cyclical unemployment Intertemporal Substitution hypothesis. 2. Unemployed job seekers might not have the skills in demand by employers. a. Frictional unemployment the Job search model. b. Structural unemployment efficiency wage theory. c. Seasonal unemployment seasonal variation in the demand for workers (in certain sectors). d.…
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.
The Suppose the world price of tobacco falls significantly. The demand for labor among tobacco-producing firms in Kentucky will demand for labor among cigarette manufacturing firms in Virginia, which use tobacco as an input, will The temporary unemployment that results from sectoral shifts such as the ones describes above is best categorized 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. Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks Increasing the benefits offered to unemployed workers through the government's unemployment insurance program Establishing government-run employment agencies to connect unemployed workers to job vacancies
19 If the economy is at full employment, which of the following is true? Group of answer choices There is no cyclical unemployment. There is zero unemployment. There is no structural unemployment. There is no frictional unemployment.
1. The inflation-unemployment relationship The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969. Hint: Use the graph to answer the following questions. Select any blue point (circle symbol) on the graph to get its exact coordinates. NFLATION RATE (Percent) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 3.0 O 1969 O 3.5 1968 O 1967 C 4.0 1965 O 5.0 1964 962 O 4.5 5.5 6.0 UNEMPLOYMENT RATE (Percent) 1963 6.5 1961 H 7.0 ++ Scratch Point A lower unemployment rate is associated with a lower inflation rate. O There is a trade-off between unemployment and inflation. O There is a positive relationship between unemployment and inflation. O The unemployment rate peaked at 3.5%. (?) Which of the following statements about the relationship between the unemployment and inflation data for 1961-1969 is true? The points on the graph represent observations along the U.S. economy's Phillips curve during the 1960s. Use the black…

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