Concept explainers
a.
whether it is true, false or uncertain thatGDP of U.S. was 32 times higher in 2014 than it was in 1960.
a.
Answer to Problem 1QAP
The above statement is False.
Explanation of Solution
In the year of 1960, the GDP was $543 billion than compared to the year of 2014 when it was $17400 billion. However, the rise in the levels of the output between the years of 1960 and 2014 cannot be said to be considered to have risen by 32 times, though it may seem so. This is because much of the increase between these years was more in terms of the rise of the prices than the rise in the output. Hence in order to assess the change in the GDP with time, real GDP method is used instead of the nominal GDP method.
Introduction:
In drawing the comparisons between the levels of GDP in the year 1960 and in the year 2014, the concept of real and nominal GDP must be considered. In the nominal GDP, the current prices of market are considered and hence it will take into account that the inflation or the deflation which has occurred during the current year.
The real GDP on the other hand is the form of GDP in which the inflation or the deflation for the current year is adjusted in determining the GDP. It is a more realistic form of calculating the GDP as it considers the real change in the levels of the price and hence presents a more accurate picture of the
b.
whether true, false or uncertain: if the
b.
Answer to Problem 1QAP
The above statement is False.
Explanation of Solution
The unemployment rate and the participation rate are not dependent upon each other and are two different concepts. Hence it will not be right to establish a direct and interdependent relation between the two completely distinctive concepts.
Introduction:
Unemployment rate is the rate of the unemployed workers in the total labor force of any economy. It is the ratio of the number of the people who are unemployed to the total number of the people in the labor force. The participation rate on the other hand is considered to be the ratio in which the people who are employed or who are seeking for the employment in the economy to the labor force of the country.
c.
whether true, false or uncertain: the unemployment rate tends to fall during expansions and rise during recessions.
c.
Answer to Problem 1QAP
The above statement is True.
Explanation of Solution
The unemployment rate is the rate of people unemployed to the labor force of any country. Thus, it is right enough to state that during the time of the expansion there is the rise in the employment opportunities in any economy and hence the rate of the unemployment reduces in such period. On the other hand, during the time of the recession in the market in any economy there is the rise in the unemployment.
Introduction:
During the time of the high production there are more job opportunities in the market and expansion will happen only in the sound economic conditions when there is enough opportunities for the market and the enterprises to grow. On the other hand, during the time of the recession there are job losses and hence unemployment increases. During the time of recession, the economical condition of any economy is not viable to support the growth of the market and hence there is the decline in the economical activities of the economy.
d.
The statement “If the Japanese
d.
Answer to Problem 1QAP
The above statement is False.
Explanation of Solution
It is important to note that the changes in the levels of the price through Consumer Price Index are used to determine the changes that occur in one country over the period. It is not used to make the inter country comparisons and hence the changes in the inflation rate of Japan cannot be compared with the change in the U.S.A by considering CPI as a method.
Introduction:
The Consumer Price Index is one of the most common phenomena to statistically identify the level of the inflation or the deflation between the various periods. It is a measure which considers the weighted average of the basket of the goods and services of the consumer, such as transportation, medical care and food. The change in the level of CPI is used to determine the changes in the prices of the cost of the living.
f.
whether the rate of inflation which is computed using CPI is better than compared to rate of inflation which is computed using the GDP calculator.
f.
Answer to Problem 1QAP
The statement isTrue.
Explanation of Solution
In the cases when the growth of the output is below the normal levels, it is an indication of adverse economic conditions in an economy. Thus, in the cases when the output growth is below the normal levels, there is bound to have rise in the levels of the unemployment in the economy which is further substantiated by the Okun’s law.
Introduction: The Okun’s law suggeststhat when the growth in the output, there is the decline in the unemployment. Thus, as per this law, in the cases when there is the decline in the output, there is the growth in the unemployment.
g.
whether the statement “The periods of negative GDP growth are called recessions” is true or false.
g.
Answer to Problem 1QAP
The above given statement is True.
Explanation of Solution
During the period of recession there is the significant decline in the economy of the country with the decline in the output of the country which thus increases the unemployment. Thus, the above statement is true as recession is characterized by the negative growth in the output production in the economy.
Introduction:
Recessions are said to be the period in which the economy of any country falls in a significant manner. During the recessions, there is the negative growth in the GDP of the country for at least a period of six months, i.e. two quarters.
i.
whether the statement “The
i.
Answer to Problem 1QAP
The above given statement is False.
Explanation of Solution
Thus, there is no relation between the levels of prices and the level of unemployment in the Philips Curve.
Introduction:
The Philips Curve is the curve which establishes the relationship between the inflation and the level of the unemployment. On the x- axis is the rate of unemployment and on the y-axis is the change in the inflation rate. In the case when the slope slides downwards, it indicates the declining unemployment rate with the declining rate in inflation.
Want to see more full solutions like this?
Chapter 2 Solutions
Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
- Assume a small open country under fixed exchanges rate and full capital mobility. Prices are fixed in the short run and equilibrium is given initially at point A. An exogenous increase in public spending shifts the IS curve to IS'. Which of the following statements is true? Group of answer choices A new equilibrium is reached at point B. The TR curve will shift down until it passes through point B. A new equilibrium is reached at point C. Point B can only be reached in the absence of capital mobility.arrow_forwardA decrease in money demand causes the real interest rate to _____ and output to _____ in the short run, before prices adjust to restore equilibrium. Group of answer choices rise; rise fall; fall fall; rise rise; fallarrow_forwardIf a country's policy makers were to continously use expansionary monetary policy in an attempt to hold unemployment below the natural rate , the long urn result would be? Group of answer choices a decrease in the unemployment rate an increase in the level of output All of these an increase in the rate of inflationarrow_forward
- A shift in the Aggregate Supply curve to the right will result in a move to a point that is southwest of where the economy is currently at. Group of answer choices True Falsearrow_forwardAn oil shock can cause stagflation, a period of higher inflation and higher unemployment. When this happens, the economy moves to a point to the northeast of where it currently is. After the economy has moved to the northeast, the Federal Reserve can reduce that inflation without having to worry about causing more unemployment. Group of answer choices True Falsearrow_forwardThe long-run Phillips Curve is vertical which indicates Group of answer choices that in the long-run, there is no tradeoff between inflation and unemployment. that in the long-run, there is no tradeoff between inflation and the price level. None of these that in the long-run, the economy returns to a 4 percent level of inflation.arrow_forward
- Suppose the exchange rate between the British pound and the U.S. dollar is £1 = $2.00. The U.S. government implementsU.S. government implements a contractionary fiscal policya contractionary fiscal policy. Illustrate the impact of this change in the market for pounds. 1.) Using the line drawing tool, draw and label a new demand line. 2.) Using the line drawing tool, draw and label a new supply line. Note: Carefully follow the instructions above and only draw the required objects.arrow_forwardJust Part D please, this is for environmental economicsarrow_forward3. Consider a single firm that manufactures chemicals and generates pollution through its emissions E. Researchers have estimated the MDF and MAC curves for the emissions to be the following: MDF = 4E and MAC = 125 – E Policymakers have decided to implement an emissions tax to control pollution. They are aware that a constant per-unit tax of $100 is an efficient policy. Yet they are also aware that this policy is not politically feasible because of the large tax burden it places on the firm. As a result, policymakers propose a two- part tax: a per unit tax of $75 for the first 15 units of emissions an increase in the per unit tax to $100 for all further units of emissions With an emissions tax, what is the general condition that determines how much pollution the regulated party will emit? What is the efficient level of emissions given the above MDF and MAC curves? What are the firm's total tax payments under the constant $100 per-unit tax? What is the firm's total cost of compliance…arrow_forward
- 2. Answer the following questions as they relate to a fishery: Why is the maximum sustainable yield not necessarily the optimal sustainable yield? Does the same intuition apply to Nathaniel's decision of when to cut his trees? What condition will hold at the equilibrium level of fishing in an open-access fishery? Use a graph to explain your answer, and show the level of fishing effort. Would this same condition hold if there was only one boat in the fishery? If not, what condition will hold, and why is it different? Use the same graph to show the single boat's level of effort. Suppose you are given authority to solve the open-access problem in the fishery. What is the key problem that you must address with your policy?arrow_forward1. Repeated rounds of negotiation exacerbate the incentive to free-ride that exists for nations considering the ratification of international environmental agreements.arrow_forwardFor environmental Economics, A-C Pleasearrow_forward
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning