The natural rate of unemployment when there is a change in the various types of unemployment. Concept Introduction: Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Question

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Answer 1

Question

Chapter 10, Problem 1.1P

Sub-part

A

To determine

The natural rate of unemployment when there is a change in the various types of unemployment.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

A

Expert Solution

Explanation of Solution

The natural unemployment rate is all unemployment other than cyclical. That implies it as the sum of frictional, seasonal, and structural unemployment. So cyclical unemployment is 2% + 2% + 0.5% = 4.5%

The cyclical unemployment rate is zero under natural rate of unemployment. Since the cyclical unemployment is 2%, so the economy is operating at 2% percent less than its potential GDP.

Sub-part

B

To determine

The natural rate of unemployment when there is a rise in the cyclical unemployment keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

B

Expert Solution

Explanation of Solution

Natural rate of unemployment remains unchanged with cyclical GDP going upto 3%. Since the cyclical unemployment is 3%, so the economy is operating at 3% percent less than its potential GDP.

Sub-part

C

To determine

The natural rate of unemployment when structural unemployment falls keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

C

Expert Solution

Explanation of Solution

Natural rate of unemployment will reduce to 4% as structural unemployment reduces to 1.5% from 2%. Cyclical unemployment remains the same, but natural rate of unemployment is now 45. So it is 0.5 % closer to potential GDP.

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Students have asked these similar questions

Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

You are the manager of a large automobile dealership who wants to learn more about the effective- ness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and the quantities sold of a basic model (adjusted for various options) over this period of time. 1. Graph this information on a scatter plot. Estimate the demand equation. What do the regression results indicate about the desirability of discounting the price? Explain. Month Price Quantity Jan. 12,500 15 Feb. 12,200 17 Mar. 11,900 16 Apr. 12,000 18 May 11,800 20 June 12,500 18 July 11,700 22 Aug. 12,100 15 Sept. 11,400 22 Oct. 11,400 25 Nov. 11,200 24 Dec. 11,000 30 Jan. 10,800 25 Feb. 10,000 28 2. What other factors besides price might be included in this equation? Do you foresee any difficulty in obtaining these additional data or incorporating them in the regression analysis?

Answer 2

Question

Chapter 10, Problem 1.1P

Sub-part

A

To determine

The natural rate of unemployment when there is a change in the various types of unemployment.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

A

Expert Solution

Explanation of Solution

The natural unemployment rate is all unemployment other than cyclical. That implies it as the sum of frictional, seasonal, and structural unemployment. So cyclical unemployment is 2% + 2% + 0.5% = 4.5%

The cyclical unemployment rate is zero under natural rate of unemployment. Since the cyclical unemployment is 2%, so the economy is operating at 2% percent less than its potential GDP.

Sub-part

B

To determine

The natural rate of unemployment when there is a rise in the cyclical unemployment keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

B

Expert Solution

Explanation of Solution

Natural rate of unemployment remains unchanged with cyclical GDP going upto 3%. Since the cyclical unemployment is 3%, so the economy is operating at 3% percent less than its potential GDP.

Sub-part

C

To determine

The natural rate of unemployment when structural unemployment falls keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

C

Expert Solution

Explanation of Solution

Natural rate of unemployment will reduce to 4% as structural unemployment reduces to 1.5% from 2%. Cyclical unemployment remains the same, but natural rate of unemployment is now 45. So it is 0.5 % closer to potential GDP.

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Answer 3

Question

Chapter 10, Problem 1.1P

Sub-part

A

To determine

The natural rate of unemployment when there is a change in the various types of unemployment.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

A

Expert Solution

Explanation of Solution

The natural unemployment rate is all unemployment other than cyclical. That implies it as the sum of frictional, seasonal, and structural unemployment. So cyclical unemployment is 2% + 2% + 0.5% = 4.5%

The cyclical unemployment rate is zero under natural rate of unemployment. Since the cyclical unemployment is 2%, so the economy is operating at 2% percent less than its potential GDP.

Sub-part

B

To determine

The natural rate of unemployment when there is a rise in the cyclical unemployment keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

B

Expert Solution

Explanation of Solution

Natural rate of unemployment remains unchanged with cyclical GDP going upto 3%. Since the cyclical unemployment is 3%, so the economy is operating at 3% percent less than its potential GDP.

Sub-part

C

To determine

The natural rate of unemployment when structural unemployment falls keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

C

Expert Solution

Explanation of Solution

Natural rate of unemployment will reduce to 4% as structural unemployment reduces to 1.5% from 2%. Cyclical unemployment remains the same, but natural rate of unemployment is now 45. So it is 0.5 % closer to potential GDP.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 1.1P

Sub-part

A

To determine

The natural rate of unemployment when there is a change in the various types of unemployment.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

A

Expert Solution

Explanation of Solution

The natural unemployment rate is all unemployment other than cyclical. That implies it as the sum of frictional, seasonal, and structural unemployment. So cyclical unemployment is 2% + 2% + 0.5% = 4.5%

The cyclical unemployment rate is zero under natural rate of unemployment. Since the cyclical unemployment is 2%, so the economy is operating at 2% percent less than its potential GDP.

Sub-part

B

To determine

The natural rate of unemployment when there is a rise in the cyclical unemployment keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

B

Expert Solution

Explanation of Solution

Natural rate of unemployment remains unchanged with cyclical GDP going upto 3%. Since the cyclical unemployment is 3%, so the economy is operating at 3% percent less than its potential GDP.

Sub-part

C

To determine

The natural rate of unemployment when structural unemployment falls keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

C

Expert Solution

Explanation of Solution

Natural rate of unemployment will reduce to 4% as structural unemployment reduces to 1.5% from 2%. Cyclical unemployment remains the same, but natural rate of unemployment is now 45. So it is 0.5 % closer to potential GDP.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1.1P

Sub-part

A

To determine

The natural rate of unemployment when there is a change in the various types of unemployment.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

A

Expert Solution

Explanation of Solution

The natural unemployment rate is all unemployment other than cyclical. That implies it as the sum of frictional, seasonal, and structural unemployment. So cyclical unemployment is 2% + 2% + 0.5% = 4.5%

The cyclical unemployment rate is zero under natural rate of unemployment. Since the cyclical unemployment is 2%, so the economy is operating at 2% percent less than its potential GDP.

Sub-part

B

To determine

The natural rate of unemployment when there is a rise in the cyclical unemployment keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

B

Expert Solution

Explanation of Solution

Natural rate of unemployment remains unchanged with cyclical GDP going upto 3%. Since the cyclical unemployment is 3%, so the economy is operating at 3% percent less than its potential GDP.

Sub-part

C

To determine

The natural rate of unemployment when structural unemployment falls keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

C

Expert Solution

Explanation of Solution

Natural rate of unemployment will reduce to 4% as structural unemployment reduces to 1.5% from 2%. Cyclical unemployment remains the same, but natural rate of unemployment is now 45. So it is 0.5 % closer to potential GDP.

Answer 6

Chapter 10, Problem 1.1P

Sub-part

A

To determine

The natural rate of unemployment when there is a change in the various types of unemployment.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

A

Expert Solution

Explanation of Solution

The natural unemployment rate is all unemployment other than cyclical. That implies it as the sum of frictional, seasonal, and structural unemployment. So cyclical unemployment is 2% + 2% + 0.5% = 4.5%

The cyclical unemployment rate is zero under natural rate of unemployment. Since the cyclical unemployment is 2%, so the economy is operating at 2% percent less than its potential GDP.

Answer 7

Chapter 10, Problem 1.1P

Sub-part

A

To determine

The natural rate of unemployment when there is a change in the various types of unemployment.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Answer 8

Sub-part

A

Expert Solution

Explanation of Solution

The natural unemployment rate is all unemployment other than cyclical. That implies it as the sum of frictional, seasonal, and structural unemployment. So cyclical unemployment is 2% + 2% + 0.5% = 4.5%

The cyclical unemployment rate is zero under natural rate of unemployment. Since the cyclical unemployment is 2%, so the economy is operating at 2% percent less than its potential GDP.

Answer 9

Sub-part

A

Expert Solution

Answer 10

Sub-part

A

Expert Solution

Answer 11

Expert Solution

Answer 12

Sub-part

B

To determine

The natural rate of unemployment when there is a rise in the cyclical unemployment keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

B

Expert Solution

Explanation of Solution

Natural rate of unemployment remains unchanged with cyclical GDP going upto 3%. Since the cyclical unemployment is 3%, so the economy is operating at 3% percent less than its potential GDP.

Answer 13

Sub-part

B

To determine

The natural rate of unemployment when there is a rise in the cyclical unemployment keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Answer 14

Sub-part

B

Expert Solution

Explanation of Solution

Natural rate of unemployment remains unchanged with cyclical GDP going upto 3%. Since the cyclical unemployment is 3%, so the economy is operating at 3% percent less than its potential GDP.

Answer 15

Sub-part

B

Expert Solution

Answer 16

Sub-part

B

Expert Solution

Answer 17

Expert Solution

Answer 18

Sub-part

C

To determine

The natural rate of unemployment when structural unemployment falls keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Sub-part

C

Expert Solution

Explanation of Solution

Natural rate of unemployment will reduce to 4% as structural unemployment reduces to 1.5% from 2%. Cyclical unemployment remains the same, but natural rate of unemployment is now 45. So it is 0.5 % closer to potential GDP.

Answer 19

Sub-part

C

To determine

The natural rate of unemployment when structural unemployment falls keeping other types of unemployment as unchanged.

Concept Introduction:

Natural Rate of Unemployment: The natural rate of unemployment is the unemployment rate under the equilibrium condition.The natural rate of unemployment is the variation between the number of people who would prefer a job in the current wage rate and the number of people who are able to take that job at the current rate. It includes all type of unemployment other than cyclical unemployment.

Answer 20

Sub-part

C

Expert Solution

Explanation of Solution

Natural rate of unemployment will reduce to 4% as structural unemployment reduces to 1.5% from 2%. Cyclical unemployment remains the same, but natural rate of unemployment is now 45. So it is 0.5 % closer to potential GDP.