Chapter 9 Buffer stocks and price stability
... The question that arises is whether using a persistent pool of unemployed (or casualised underemployed) is the most cost effective way to achieve price stability? The ...
... The question that arises is whether using a persistent pool of unemployed (or casualised underemployed) is the most cost effective way to achieve price stability? The ...
2010_Macro_FRQ_ans
... Answer: 1. (c) (i) The increase in AD will result in more inflation and workers demanding higher wages. This increase in resource cost at contract time in the long run would move the SRAS to the left. (c) (ii) PL2, as shown on the above graph, is a higher PL than PLE. ...
... Answer: 1. (c) (i) The increase in AD will result in more inflation and workers demanding higher wages. This increase in resource cost at contract time in the long run would move the SRAS to the left. (c) (ii) PL2, as shown on the above graph, is a higher PL than PLE. ...
AP MACRO MID-TERM REVIEW
... the newest consumer products. (Result: CPI measures prices but not the increase in choices) 3. Product Quality- The CPI ignores both improvements and decline in product quality. (Result: CPI may suggest that prices stay the same though economic ...
... the newest consumer products. (Result: CPI measures prices but not the increase in choices) 3. Product Quality- The CPI ignores both improvements and decline in product quality. (Result: CPI may suggest that prices stay the same though economic ...
2010 FRQ
... Answer: 1. (c) (i) The increase in AD will result in more inflation and workers demanding higher wages. This increase in resource cost at contract time in the long run would move the SRAS to the left. (c) (ii) PL2, as shown on the above graph, is a higher PL than PLE. ...
... Answer: 1. (c) (i) The increase in AD will result in more inflation and workers demanding higher wages. This increase in resource cost at contract time in the long run would move the SRAS to the left. (c) (ii) PL2, as shown on the above graph, is a higher PL than PLE. ...
GDP
... the Effects of Inflation Price indexes are used to correct for the effects of inflation when comparing dollar figures from different times. Carabao “Made in Thailand” sold about 1.5 million cassettes in 1985. How much did the band earn if we convert into 2003? : Suppose each cassette the band receiv ...
... the Effects of Inflation Price indexes are used to correct for the effects of inflation when comparing dollar figures from different times. Carabao “Made in Thailand” sold about 1.5 million cassettes in 1985. How much did the band earn if we convert into 2003? : Suppose each cassette the band receiv ...
Exam #1
... False. The “rule of 70” states that the number of years it takes for a country’s per capita GDP to double is equal to 70 divided by the growth rate of per capita income (expressed as a percent.) 2. (4 points) The difference between the unemployment rate and the natural rate of unemployment is that t ...
... False. The “rule of 70” states that the number of years it takes for a country’s per capita GDP to double is equal to 70 divided by the growth rate of per capita income (expressed as a percent.) 2. (4 points) The difference between the unemployment rate and the natural rate of unemployment is that t ...
Y - Edward McPhail
... 1. Deficit financed by M leads to AD shifts out, as in Fig 28.2 s 2. If deficit persists, M continually and get P continually, i.e., as in Fig 28.2 Conclusion: Deficit , only if it is 1. Persistent 2. Financed by money creation rather than by bonds ...
... 1. Deficit financed by M leads to AD shifts out, as in Fig 28.2 s 2. If deficit persists, M continually and get P continually, i.e., as in Fig 28.2 Conclusion: Deficit , only if it is 1. Persistent 2. Financed by money creation rather than by bonds ...
Re-Evaluating Labor Market Dynamics
... they typically experience a sharp decline in their ability to quickly find new employment. In addition, the declines in job finding rates are magnified during and shortly after recessions, though this effect dissipates over time. These factors suggest recessions often lead to a permanent decline in ...
... they typically experience a sharp decline in their ability to quickly find new employment. In addition, the declines in job finding rates are magnified during and shortly after recessions, though this effect dissipates over time. These factors suggest recessions often lead to a permanent decline in ...
Testimony by James A - Fiscal Policy Institute
... Recently it was reported that the unemployment rate in New York City dropped to 5.2 percent in March. Many things enter into the reported unemployment rate and this is one of those periods when a seemingly low official number does not reflect a strong labor market. There are at least three factors t ...
... Recently it was reported that the unemployment rate in New York City dropped to 5.2 percent in March. Many things enter into the reported unemployment rate and this is one of those periods when a seemingly low official number does not reflect a strong labor market. There are at least three factors t ...
Answers to Homework #3
... Choice of base year for the CPI changes the CPI index numbers but does not alter the rate of inflation over the time period. Your answers should be the same and if they are different (more than expected from rounding error) you have made a mistake. 5. Suppose an economy’s aggregate production functi ...
... Choice of base year for the CPI changes the CPI index numbers but does not alter the rate of inflation over the time period. Your answers should be the same and if they are different (more than expected from rounding error) you have made a mistake. 5. Suppose an economy’s aggregate production functi ...
Mr. Nixon's New Economic Policy can't work—precisely because
... fooling people into thinking a pay cut is really a raise, is to keep increasing the rate of inflation, which soon becomes obvious too, and results in a spiraling situation as people rush to unload money for goods. This is likewise the verdict of most recent factual research on the "Phillips Curve"—t ...
... fooling people into thinking a pay cut is really a raise, is to keep increasing the rate of inflation, which soon becomes obvious too, and results in a spiraling situation as people rush to unload money for goods. This is likewise the verdict of most recent factual research on the "Phillips Curve"—t ...
practice final_ans
... (a) GDP includes the transfers of existing commodities, like old houses. Answer: False. GDP only count the newly produced goods and services. Buying and selling of used goods doesn’t count, because the value of it was included in GDP when it was produced. (b) When more jobs are created, unemployment ...
... (a) GDP includes the transfers of existing commodities, like old houses. Answer: False. GDP only count the newly produced goods and services. Buying and selling of used goods doesn’t count, because the value of it was included in GDP when it was produced. (b) When more jobs are created, unemployment ...
The Short-Run Phillips Curve
... between unemployment and inflation that arise as shifts in the aggregate demand curve move the economy along the short-run aggregate supply curve. • The greater the aggregate demand for goods and services, the greater is the economy’s output, and the higher is the overall price level. • A higher lev ...
... between unemployment and inflation that arise as shifts in the aggregate demand curve move the economy along the short-run aggregate supply curve. • The greater the aggregate demand for goods and services, the greater is the economy’s output, and the higher is the overall price level. • A higher lev ...
2010 FRQ2
... (ii) How will this government action affect the unemployment rate in the short run? Explain. Answer: 1. (b) (i) As can be seen on the graph, the increase in G would increase AD to AD2, increasing PL and Y. 1. (b) (II) The increase in AD to AD2 would decrease unemployment in the short run, as the inc ...
... (ii) How will this government action affect the unemployment rate in the short run? Explain. Answer: 1. (b) (i) As can be seen on the graph, the increase in G would increase AD to AD2, increasing PL and Y. 1. (b) (II) The increase in AD to AD2 would decrease unemployment in the short run, as the inc ...
ECON 2020-400 Principles of Macroeconomics
... somehow challenged by the fast growth in Asia and Latin America? What makes one nation. grow faster than another? How do firms decide what to produce and how much to produce? What motivate nations to trade with each other? How to interprete the fluctuation in the security market? .... .. The course ...
... somehow challenged by the fast growth in Asia and Latin America? What makes one nation. grow faster than another? How do firms decide what to produce and how much to produce? What motivate nations to trade with each other? How to interprete the fluctuation in the security market? .... .. The course ...
Document
... goods & services (shift from AD1 to AD2), prices will rise to P105 and output will temporarily exceed fullemployment capacity (increases to Y2). ...
... goods & services (shift from AD1 to AD2), prices will rise to P105 and output will temporarily exceed fullemployment capacity (increases to Y2). ...
PDF Download
... LD curve (not drawn here) would be downward sloping. The equilibrium level of unemployment is the one which makes wage aspirations compatible with the wages firms are willing to pay, that is it is determined by the intersection of the two curves. According to the equilibrium rate theory, only struct ...
... LD curve (not drawn here) would be downward sloping. The equilibrium level of unemployment is the one which makes wage aspirations compatible with the wages firms are willing to pay, that is it is determined by the intersection of the two curves. According to the equilibrium rate theory, only struct ...
Problem Set - Kanit Kuevibulvanich
... 4. Suppose the economy is initially in the equilibrium operating above the potential GDP. Is this economy in the long-run equilibrium? If not, graphically and verbally explain what would happen towards the long run. 5. Suppose the economy is initially in the equilibrium operating below the potential ...
... 4. Suppose the economy is initially in the equilibrium operating above the potential GDP. Is this economy in the long-run equilibrium? If not, graphically and verbally explain what would happen towards the long run. 5. Suppose the economy is initially in the equilibrium operating below the potential ...
ch05 - Whitman People
... The periods of the Great Depression and World War I and II show the largest fluctuations in aggregate output. © 2014 Pearson Education, Inc. ...
... The periods of the Great Depression and World War I and II show the largest fluctuations in aggregate output. © 2014 Pearson Education, Inc. ...
Notes on Business Cycles
... producing more. This theory will not work in the macroeconomic world. In macroeconomic theory, it’s not just a single good price rising, it’s the price of all goods rising. This includes the price of all productive resources (for example, land, labor, capital). As prices of all goods and resources i ...
... producing more. This theory will not work in the macroeconomic world. In macroeconomic theory, it’s not just a single good price rising, it’s the price of all goods rising. This includes the price of all productive resources (for example, land, labor, capital). As prices of all goods and resources i ...
Classical Long Run Aggregate Supply
... steel or oranges, and will not necessarily pay less and hire more workers in times of high unemployment. This might demotivate the staff. ...
... steel or oranges, and will not necessarily pay less and hire more workers in times of high unemployment. This might demotivate the staff. ...
the natural rate of unemployment
... D. More workers post their resumes at Monster.com, and more employers use Monster.com to find suitable workers to hire. E. Sectoral shifts become more frequent. ...
... D. More workers post their resumes at Monster.com, and more employers use Monster.com to find suitable workers to hire. E. Sectoral shifts become more frequent. ...
Ch. 14 Inflation Ppt.
... workers in powerful bargaining positions, and those who borrowed money are the ...
... workers in powerful bargaining positions, and those who borrowed money are the ...
Full Employment: The Road Not Taken
... It is understood in mainstream economics that true full employment is neither possible nor desirable. It is not possible due to automation, outsourcing, and other structural shifts in the economy that prevent the market from creating jobs for all who want them. It is undesirable because, even if the ...
... It is understood in mainstream economics that true full employment is neither possible nor desirable. It is not possible due to automation, outsourcing, and other structural shifts in the economy that prevent the market from creating jobs for all who want them. It is undesirable because, even if the ...
... Data released since your last Directors' meeting show the economy is gaining strength as the manufacturing sector continues to improve and the labor market finally shows signs of growth. In November, payroll employment posted its fourth consecutive increase and the unemployment rate fell. Initial cl ...
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.