Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 10, Problem 13CQ
(a)
To determine
Illustrate the impact of an increase in the housing price on output and employment in a graph.
(b)
To determine
Illustrate the impact of a fall in the housing price on output and employment in a graph.
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Assume that the economy is in a full employment equilibrium. There is an increase in
consumer sentiment. The following combination of events are likely to occur
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
a
output rises, prices fall
b
output falls, prices rise.
output rises, prices rise
d
output falls, prices fall
Why do consumers mostly gain little buying power during a
deflation?
Determination of Equilibrium
Level of Employment by The
aggregate demand price and
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Chapter 10 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Suppose that all other factors affecting the labor market remain constant. Graphically illustrate and explain what is the effect of an increase in unemployment benefits on the equilibrium levels of real wage and unemployment. (Hint: In your graph, put the real wage on the vertical axis, and the level of unemployment on the horizontal axis. Use wage-setting relation and price-setting relation to analyze the question.) Upload your results by taking a photo / scan of your answer.arrow_forwardAssume that the economy is in a full employment equilibrium. There is an improvement in overall technology for all firms. The following combination of events are likely to occur a output rises, prices fall b output falls, prices rise . c output rises, prices rise d output falls, prices fallarrow_forwardBecause the long-term trend has been for prices to rise, adjusting Nominal GDP to Real GDP involves inflating the lower prices before the base year and deflating the higher prices after the base year. 1) True 2) Falsearrow_forward
- Explain: “Unemployment can be caused by a decrease of aggregate demand or a decrease of aggregate supply.” In each case, specify the price-level outcomes.arrow_forwardEvaluate the claim that “recessions are caused by high job separation rates” ([Hint: Think about the movements in market tightness, unemployment, and vacancies and their cross-correlation when the job separation increases. Are the implications consistent with the empirical Beveridge curve ?]arrow_forwardSuppose the world price of wood pulp falls substantially. The demand for labour among wood pulp-producing firms in northern British Columbia will .The demand for labour among paper and packaging-producing firms in southern British Columbia, for which wood pulp is an input, The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment. will Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply. Establishing government-run employment agencies to connect unemployed workers to job vacancies Extending the number of weeks for which unemployed workers are eligible for Employment Insurance benefits from the government Improving a widely used job search website so that it matches workers to job vacancies more effectivelyarrow_forward
- Suppose the economy produces real GDP of $45 billion when unemployment is at Its natural rate. Use the purple points (diamond symbols) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. PRICE LEVEL 132 128 124 120 116 112 108 104 100 0 10 20 30 40 50 60 70 80 REAL GDP (Billions of dollars) LRAS Help Clear All In the table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve. Note: While economic growth generally shifts the LRAS curve to the right, some circumstances can shift it to the left. Event A scientific breakthrough significantly increases food production per acre of farmland. A government-sponsored training program increases the skill level of the workforce. The government allows more immigration of working-age adults. LRAS Curve Shifts to the... Right Left karrow_forwardDuring recessions, income a) falls and unemployment rises b) and unemployment both fall c) rises and unemployment falls d) and unemployment both risearrow_forwardUnemployment can be caused by a decrease of aggregate demand OR a decrease of aggregate supply. Do you agree or disagree and why? In each case, specify the price-level outcomesarrow_forward
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