Econ Macro (book Only)
Econ Macro (book Only)
6th Edition
ISBN: 9781337408745
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 16, Problem 2P
To determine

The short-run and long-run effects on the economy when the policymakers assume that the economy is overheating

Introduction:

Natural Rate of Unemployment: It is the lowest rate of unemployment an economy will reach. It is a combination of frictional and structural unemployment that persists in an efficient, expanding economy when labor and resource markets are in equilibrium.

Aggregate Demand: The amount of goods and services purchased at all possible prices at a given point of time is termed as Aggregate Demand

Aggregate Supply: The total amount of goods and services available in the economy at a particular point of time is termed as Aggregate Supply

Recessionary Gap: When the economy operates below its potential output is termed as the Recessionary Gap.

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Tasks Exercise 1 Assess the following functions: 1. f(x)= x2+6x+2 2.f '(x)=10x-2x2+5 a. Find the stationary points. (5 marks) b. Determine whether the stationary point is a maximum or minimum. (5 marks) c. Draw the corresponding curves (5 marks)
Problem 2: The sales data over the last 10 years for the Acme Hardware Store are as follows: 2003 $230,000 2008 $526,000 2004 276,000 2009 605,000 2005 328,000 2010 690,000 2006 388,000 2011 779,000 2007 453,000 2012 873,000 1. Calculate the compound growth rate for the period of 2003 to 2012. 2. Based on your answer to part a, forecast sales for both 2013 and 2014. 3. Now calculate the compound growth rate for the period of 2007 to 2012. 1. Based on your answer to part e, forecast sales for both 2013 and 2014. 5. What is the major reason for the differences in your answers to parts b and d? If you were to make your own projections, what would you forecast? (Drawing a graph is very helpful.)
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