Master Entrance Exam
... B) A 1/3 percent increase in capital per hour of labor leads to a 1/3 percent increase in labor per hour of capital. C) If capital per hour of labor increases by 3 percent, real GDP per hour of labor will increase by 1 percent. D) If capital per hour of labor increases by 3 percent, labor will incre ...
... B) A 1/3 percent increase in capital per hour of labor leads to a 1/3 percent increase in labor per hour of capital. C) If capital per hour of labor increases by 3 percent, real GDP per hour of labor will increase by 1 percent. D) If capital per hour of labor increases by 3 percent, labor will incre ...
Exam Name___________________________________
... 16) An economy is in a long-run equilibrium. The real interest rate and the target rate of return are 6 percent a year. Then technology advances and the real interest rate rises to 10 percent. Neoclassical growth theory predicts that economic growth will continue ________. A) indefinitely B) until t ...
... 16) An economy is in a long-run equilibrium. The real interest rate and the target rate of return are 6 percent a year. Then technology advances and the real interest rate rises to 10 percent. Neoclassical growth theory predicts that economic growth will continue ________. A) indefinitely B) until t ...
understanding stagflation
... (and perhaps some other emerging economies). India’s economy has been greatly liberalized since 1991 – indeed, one can argue that the external financial sector has been over-liberalized. Nevertheless the macroeconomic views of the liberalizers and the media are pre 1991 and mostly Keynesian. Inflati ...
... (and perhaps some other emerging economies). India’s economy has been greatly liberalized since 1991 – indeed, one can argue that the external financial sector has been over-liberalized. Nevertheless the macroeconomic views of the liberalizers and the media are pre 1991 and mostly Keynesian. Inflati ...
Chapter Twenty Three
... is the dollar value of all final goods and services produced. Final good: a product which is ready to be used by consumers ...
... is the dollar value of all final goods and services produced. Final good: a product which is ready to be used by consumers ...
CH03
... G) Application: weekly hours of work and the wealth of nations 1. In 1869 the average workweek in manufacturing was 56 hours; it’s now about 40 2. The main reason for the decline is a permanent increase in the real wage, due to technological innovation and increased productivity 3. Although the work ...
... G) Application: weekly hours of work and the wealth of nations 1. In 1869 the average workweek in manufacturing was 56 hours; it’s now about 40 2. The main reason for the decline is a permanent increase in the real wage, due to technological innovation and increased productivity 3. Although the work ...
chapter 9 - Ken Farr (GCSU)
... than its long-run potential, the economy will experience a. declining real wages and interest rates that will stimulate employment and real output. b. rising interest rates that will stimulate aggregate demand and restore full employment. c. a budget surplus that will stimulate demand and, thereby, ...
... than its long-run potential, the economy will experience a. declining real wages and interest rates that will stimulate employment and real output. b. rising interest rates that will stimulate aggregate demand and restore full employment. c. a budget surplus that will stimulate demand and, thereby, ...
The Anglo-Saxon model of employment in the current
... 11% (1986). Of course, not only in United Kingdom there was an increase in unemployment during the 80s, but in most industrialized countries, except Japan. The difference consisted in the fact that Japan applied flexible wages, meaning that they were changed depending on the productivity and profita ...
... 11% (1986). Of course, not only in United Kingdom there was an increase in unemployment during the 80s, but in most industrialized countries, except Japan. The difference consisted in the fact that Japan applied flexible wages, meaning that they were changed depending on the productivity and profita ...
Chapter 2 : School of Thoughts
... mistake, they will no longer make mistakes. – Only unanticipated policies have an effect on the output and employment. – SR AS is upward sloping from imperfect information. – LR AS is vertical. ...
... mistake, they will no longer make mistakes. – Only unanticipated policies have an effect on the output and employment. – SR AS is upward sloping from imperfect information. – LR AS is vertical. ...
Chapter 10
... 10-18. In Figure 10.1, which of the following could cause a shift from AD0 to AD1, ceteris paribus? → A decrease in investment An increase in exports An increase in consumer confidence An increase in consumption 10-19. In Figure 10.1, suppose this economy is in equilibrium at Point a and that QF re ...
... 10-18. In Figure 10.1, which of the following could cause a shift from AD0 to AD1, ceteris paribus? → A decrease in investment An increase in exports An increase in consumer confidence An increase in consumption 10-19. In Figure 10.1, suppose this economy is in equilibrium at Point a and that QF re ...
Chapter 5 MONEY AND INFLATION
... According to nonactivists, in modern economies, wages and prices are sufficiently flexible to allow the economy to equilibrate at reasonable speed at natural real GDP. They believe activist monetary policies may not work, and may be more destabilizing rather than stabilizing, and are likely to m ...
... According to nonactivists, in modern economies, wages and prices are sufficiently flexible to allow the economy to equilibrate at reasonable speed at natural real GDP. They believe activist monetary policies may not work, and may be more destabilizing rather than stabilizing, and are likely to m ...
DOC - Europa.eu
... A banking union has also been agreed and starts being put in place. This means that we have a framework for better resolving financial crises at the EMU level and for reducing the risk of further bank bailouts with taxpayer money. Does this mean that the original shortcomings of the Economic and Mon ...
... A banking union has also been agreed and starts being put in place. This means that we have a framework for better resolving financial crises at the EMU level and for reducing the risk of further bank bailouts with taxpayer money. Does this mean that the original shortcomings of the Economic and Mon ...
14.02, Spring 2003 Problem Set 4: Open economy IS-LM
... State whether each of the following statements is True or False, and justify your answer in 2-3 sentences and/or a simple diagram. (a) A country with a fixed exchange rate is unable to use fiscal policy to change the level of output (Y) (b) In an open economy IS-LM model with flexible exchange rates ...
... State whether each of the following statements is True or False, and justify your answer in 2-3 sentences and/or a simple diagram. (a) A country with a fixed exchange rate is unable to use fiscal policy to change the level of output (Y) (b) In an open economy IS-LM model with flexible exchange rates ...
Implications of Behavioral Economics for Monetary Policy
... to treat workers in ways they consider unfair—either by cutting nominal wages or by raising nominal wages by less than workers think they should receive, causing inflation to “bottom out” as unemployment rises. For the United States, Clark, Laxton, and Rose (1996) find evidence of nonlinearity, althou ...
... to treat workers in ways they consider unfair—either by cutting nominal wages or by raising nominal wages by less than workers think they should receive, causing inflation to “bottom out” as unemployment rises. For the United States, Clark, Laxton, and Rose (1996) find evidence of nonlinearity, althou ...
AP Macro Unit 3 Student Notes
... If for some reason there is a large demand for British goods we will find an unfavorable balance of trade. This will drive up the demand for pounds. Eventually the market will take over and our dollar will depreciate. If before the depreciation a 2 pound widget costs $4 at a $2 for 1 pound exchange ...
... If for some reason there is a large demand for British goods we will find an unfavorable balance of trade. This will drive up the demand for pounds. Eventually the market will take over and our dollar will depreciate. If before the depreciation a 2 pound widget costs $4 at a $2 for 1 pound exchange ...
mankiw9e_lecture_sli..
... The effects of falling prices There was a big deflation: P fell 25% 1929-33. A sudden fall in expected inflation means the ex-ante real interest rate rises for any given nominal rate (i ) ex ante real interest rate = i – e ...
... The effects of falling prices There was a big deflation: P fell 25% 1929-33. A sudden fall in expected inflation means the ex-ante real interest rate rises for any given nominal rate (i ) ex ante real interest rate = i – e ...
PRESS RELEASE SUMMARY OF THE MONETARY POLICY COMMITTEE MEETING No: 2015-43
... June with the moderate course of consumer loans and lower energy prices. 10. In March 2015, unemployment rates were down 0.1 point from the previous period in seasonally-adjusted terms. Amid non-farm employment losses, unemployment rates declined on falling non-farm labor force. In this period, cons ...
... June with the moderate course of consumer loans and lower energy prices. 10. In March 2015, unemployment rates were down 0.1 point from the previous period in seasonally-adjusted terms. Amid non-farm employment losses, unemployment rates declined on falling non-farm labor force. In this period, cons ...
Homework 5
... In 2005, a hurricane hit New Orleans, Louisiana, an important transportation and oil refining center in the USA, one of Hong Kong’s key for the petrochemical industry in that country. a. Consider the impact of the recent hurricanes that devastated that city as a temporary supply shock for the USA. D ...
... In 2005, a hurricane hit New Orleans, Louisiana, an important transportation and oil refining center in the USA, one of Hong Kong’s key for the petrochemical industry in that country. a. Consider the impact of the recent hurricanes that devastated that city as a temporary supply shock for the USA. D ...
Monetary policy and forward guidance in the UK
... some signs of more normal growth mean that the economy is back to normal; and it would be equally misguided to think that if growth were to be near trend monetary policy should be quickly returned to a more normal setting. There are two reasons for that – first, the recent encouraging signs of growt ...
... some signs of more normal growth mean that the economy is back to normal; and it would be equally misguided to think that if growth were to be near trend monetary policy should be quickly returned to a more normal setting. There are two reasons for that – first, the recent encouraging signs of growt ...
14.02 Principles of Macroeconomics Problem Set 1 Fall 2005
... original equilibrium calculations followed by a discussion of multiplier.) ...
... original equilibrium calculations followed by a discussion of multiplier.) ...
Solutions for Chapters 19-21
... utilized because the only unemployment that exists is the natural consequence of an efficiently working market. Thus the economy can be at full employment with a 4.1 percent unemployment rate, provided that the 4.1 percent unemployment is frictional and structural only. 3. 6.0%. 5.8%. Employment inc ...
... utilized because the only unemployment that exists is the natural consequence of an efficiently working market. Thus the economy can be at full employment with a 4.1 percent unemployment rate, provided that the 4.1 percent unemployment is frictional and structural only. 3. 6.0%. 5.8%. Employment inc ...
Full employment
Full employment, in macroeconomics, is the level of employment rates where there is no cyclical or deficient-demand unemployment. It is defined by the majority of mainstream economists as being an acceptable level of unemployment somewhere above 0%. The discrepancy from 0% arises due to non-cyclical types of unemployment, such as frictional unemployment (there will always be people who have quit or have lost a seasonal job and are in the process of getting a new job) and structural unemployment (mismatch between worker skills and job requirements). Unemployment above 0% is seen as necessary to control inflation in capitalist economies, to keep inflation from accelerating, i.e., from rising from year to year. This view is based on a theory centering on the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU); in the current era, the majority of mainstream economists mean NAIRU when speaking of ""full"" employment. The NAIRU has also been described by Milton Friedman, among others, as the ""natural"" rate of unemployment. Having many names, it has also been called the structural unemployment rate.The 20th century British economist William Beveridge stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% and 13%, depending on the country, time period, and their political biases. For the United States, economist William T. Dickens found that full-employment unemployment rate varied a lot over time but equaled about 5.5 percent of the civilian labor force during the 2000s. Recently, economists have emphasized the idea that full employment represents a ""range"" of possible unemployment rates. For example, in 1999, in the United States, the Organisation for Economic Co-operation and Development (OECD) gives an estimate of the ""full-employment unemployment rate"" of 4 to 6.4%. This is the estimated unemployment rate at full employment, plus & minus the standard error of the estimate.The concept of full employment of labor corresponds to the concept of potential output or potential real GDP and the long run aggregate supply (LRAS) curve. In neoclassical macroeconomics, the highest sustainable level of aggregate real GDP or ""potential"" is seen as corresponding to a vertical LRAS curve: any increase in the demand for real GDP can only lead to rising prices in the long run, while any increase in output is temporary.