Classical model of price level: It suggests that it is the supply in the economy that creates its own demand. The model suggests that economy is always at full level of employment. Hence the aggregate supply curve is vertical. Any change in the quantity of money supply is reflected as a change in the aggregate price level even in the short run. Inflation: When the price of any good increases continuously for an interval of time it is called inflation. Hyperinflation: When the inflation rate is very high and is usually for a longer duration then it is termed as hyperinflation. Natural rate of unemployment : It is the rate of unemployment when real rate of output is equal to the potential output in the economy. At such a point economy does not have recessionary gap or inflationary gap.

Question

Describe the various measures used to assess poverty and economic inequality. Analyze the causes and consequences of poverty and inequality, and discuss potential policies and programs aimed at reducing them, assess the adequacy of current environmental regulations in addressing negative externalities. analyze the role of labor unions in labor markets. What is one benefit, and one challenge associated with labor unions.

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Chapter 31, Problem 2P

To determine

Concept Introduction:

Classical model of price level: It suggests that it is the supply in the economy that creates its own demand. The model suggests that economy is always at full level of employment. Hence the aggregate supply curve is vertical. Any change in the quantity of money supply is reflected as a change in the aggregate price level even in the short run.

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Hyperinflation: When the inflation rate is very high and is usually for a longer duration then it is termed as hyperinflation.

Natural rate of unemployment: It is the rate of unemployment when real rate of output is equal to the potential output in the economy. At such a point economy does not have recessionary gap or inflationary gap.

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Describe the various measures used to assess poverty and economic inequality. Analyze the causes and consequences of poverty and inequality, and discuss potential policies and programs aimed at reducing them, assess the adequacy of current environmental regulations in addressing negative externalities. analyze the role of labor unions in labor markets. What is one benefit, and one challenge associated with labor unions.

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