PROBLEMS AND SOLUTIONS for B-level course Joakim Persson
... 3.3B. Suppose that immigration raises the labor force by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage? One way to solve B., assume A=1, K=1, L0=1 and L1=1.1. 3.3C. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. ...
... 3.3B. Suppose that immigration raises the labor force by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage? One way to solve B., assume A=1, K=1, L0=1 and L1=1.1. 3.3C. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. ...
In Defense of Employer of Last Resort: a response to Malcolm Sawyer
... raising taxes and cutting overall spending) even as it phased-in ELR to achieve full employment. We do not recommend such a policy, but we emphasize that Sawyer has fundamentally misunderstood the operation of the ELR program. Sawyer rightly argues that ELR workers will need some capital and materia ...
... raising taxes and cutting overall spending) even as it phased-in ELR to achieve full employment. We do not recommend such a policy, but we emphasize that Sawyer has fundamentally misunderstood the operation of the ELR program. Sawyer rightly argues that ELR workers will need some capital and materia ...
Should Monetary Policy Target Labor’s Share of Income?
... changes in the VAR that is used to forecast future labor’s share values. For a broad range of reasonable specifications of this VAR, the model’s fit is actually quite poor. Second, we re-examine the evidence in Sbordone (1998). While this paper did not, in fact, compare the relative fits of inflatio ...
... changes in the VAR that is used to forecast future labor’s share values. For a broad range of reasonable specifications of this VAR, the model’s fit is actually quite poor. Second, we re-examine the evidence in Sbordone (1998). While this paper did not, in fact, compare the relative fits of inflatio ...
1. Business cycles are: A) regular and predictable. B) irregular but
... D) price level. 9. If the short‐run aggregate supply curve is horizontal, then changes in aggregate demand affect: A) level of output but not prices. B) prices but not level of output. C) both prices and level of output. D) neither prices nor level of output. 10. If the short‐run aggregate supply cu ...
... D) price level. 9. If the short‐run aggregate supply curve is horizontal, then changes in aggregate demand affect: A) level of output but not prices. B) prices but not level of output. C) both prices and level of output. D) neither prices nor level of output. 10. If the short‐run aggregate supply cu ...
CHAPTER 29: AGGREGATE DEMAND AND - jb
... falls at higher prices, and at lower prices, the quantity demanded is higher. Bear in Mind The aggregate demand-aggregate supply model is part of a free-response question on almost every AP macroeconomics exam. As part of the question, you are asked to draw a correctly labeled graph. It is very impo ...
... falls at higher prices, and at lower prices, the quantity demanded is higher. Bear in Mind The aggregate demand-aggregate supply model is part of a free-response question on almost every AP macroeconomics exam. As part of the question, you are asked to draw a correctly labeled graph. It is very impo ...
The Keynesian Theory of Business Cycles and Macroeconomic
... Copyright © 2011 Pearson Addison-Wesley. All rights reserved. ...
... Copyright © 2011 Pearson Addison-Wesley. All rights reserved. ...
Mark scheme - June
... dealing with the market failures that arise when there are negative externalities. The use of 'most effective' in the question implies that other means are available and should be discussed. No specific context is given in the question, although clearly some application to air transport is relevant. ...
... dealing with the market failures that arise when there are negative externalities. The use of 'most effective' in the question implies that other means are available and should be discussed. No specific context is given in the question, although clearly some application to air transport is relevant. ...
Remarks by Governor Ben S. Bernanke At the meetings of the
... structure is held constant, there exists a long-run tradeoff between volatility in output and volatility in inflation. The ultimate source of this long-run tradeoff is the existence of shocks to aggregate supply. Consider the canonical example of an aggregate supply shock, a sharp rise in oil prices ...
... structure is held constant, there exists a long-run tradeoff between volatility in output and volatility in inflation. The ultimate source of this long-run tradeoff is the existence of shocks to aggregate supply. Consider the canonical example of an aggregate supply shock, a sharp rise in oil prices ...
NBER WORKING PAPER SERIES THE PHILLIPS CURVE IS BACK? USING
... appropriate on the right hand side of equation (2). Domestic price setting depends on domestic nominal wages. Therefore, in ation in domestically produced goods is appropriate on the left hand side. In a closed economy (where GDP in ation equals CPI in ation), the natural rate hypothesis boils down ...
... appropriate on the right hand side of equation (2). Domestic price setting depends on domestic nominal wages. Therefore, in ation in domestically produced goods is appropriate on the left hand side. In a closed economy (where GDP in ation equals CPI in ation), the natural rate hypothesis boils down ...
Parkin-Bade Chapter 22
... Macroeconomic Schools of Thought The Keynesian View A Keynesian macroeconomist believes that left alone, the economy would rarely operate at full employment and that to achieve and maintain full employment, active help from fiscal policy and monetary policy is required. The term “Keynesian” derives ...
... Macroeconomic Schools of Thought The Keynesian View A Keynesian macroeconomist believes that left alone, the economy would rarely operate at full employment and that to achieve and maintain full employment, active help from fiscal policy and monetary policy is required. The term “Keynesian” derives ...
NBER WORKING PAPER SERIES DSGE MODELS FOR MONETARY POLICY ANALYSIS Mathias Trabandt
... this purpose. We show that whether the HP filter is a good estimator of the gap depends sensitively on the details of the underlying model economy. This discussion involves a careful review of the intuition of how the New Keynesian model responds to shocks. Interestingly, a New Keynesian model fit t ...
... this purpose. We show that whether the HP filter is a good estimator of the gap depends sensitively on the details of the underlying model economy. This discussion involves a careful review of the intuition of how the New Keynesian model responds to shocks. Interestingly, a New Keynesian model fit t ...
My lecture
... level will affect the total output of the economy because the firms will respond to price level changes. • Remember that relative prices are not changing; it is the price level that is changing. Econ 202 Dr. Ugur Aker ...
... level will affect the total output of the economy because the firms will respond to price level changes. • Remember that relative prices are not changing; it is the price level that is changing. Econ 202 Dr. Ugur Aker ...
Parkin-Bade Chapter 22
... Macroeconomic Schools of Thought The Keynesian View A Keynesian macroeconomist believes that left alone, the economy would rarely operate at full employment and that to achieve and maintain full employment, active help from fiscal policy and monetary policy is required. The term “Keynesian” derives ...
... Macroeconomic Schools of Thought The Keynesian View A Keynesian macroeconomist believes that left alone, the economy would rarely operate at full employment and that to achieve and maintain full employment, active help from fiscal policy and monetary policy is required. The term “Keynesian” derives ...
Exercise 6 (+additional question) in Mankiw:
... 3.3B. Suppose that immigration raises the labor force by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage? One way to solve B., assume A=1, K=1, L0=1 and L1=1.1. 3.3C. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. ...
... 3.3B. Suppose that immigration raises the labor force by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage? One way to solve B., assume A=1, K=1, L0=1 and L1=1.1. 3.3C. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. ...
Advanced Macroeconomics 4. The Zero Lower Bound
... the tension that central bankers feel when in a liquidity trap. When up against the zero bound, they might like to raise inflation expectations but then they are concerned that this could make inflation go higher than they would like. The public’s awareness that the central bank will clamp down on i ...
... the tension that central bankers feel when in a liquidity trap. When up against the zero bound, they might like to raise inflation expectations but then they are concerned that this could make inflation go higher than they would like. The public’s awareness that the central bank will clamp down on i ...
Monetary Policy and the Behavior of Long
... the model off at the actual values for inflation, interest rates, and real output at the end of 1980, and then traces the hnplications of the model from that time forward, not allowing the model to "see" any actual data during the simulation period.~ The shnulation suggests that the transmission cha ...
... the model off at the actual values for inflation, interest rates, and real output at the end of 1980, and then traces the hnplications of the model from that time forward, not allowing the model to "see" any actual data during the simulation period.~ The shnulation suggests that the transmission cha ...
2 AGGREGATE SUPPLY AND DEMAND: A SIMPLE FRAMEWORK
... increases) then firms will devote more of their productive activity to producing that good, taking resources away from production of other goods. However, this logic does not work the same way in the aggregate macroeconomy. A price increase in the macroeconomy means that the prices of all goods have ...
... increases) then firms will devote more of their productive activity to producing that good, taking resources away from production of other goods. However, this logic does not work the same way in the aggregate macroeconomy. A price increase in the macroeconomy means that the prices of all goods have ...
Northeast - Minnesota Secretary Of State
... Northeast Minnesota business conditions are expected to improve over the next several months according to the predictions of the St. Cloud State University (SCSU) Northeast Minnesota Index of Leading Economic Indicators. The leading economic indicator index (LEI) improved in the second quarter as in ...
... Northeast Minnesota business conditions are expected to improve over the next several months according to the predictions of the St. Cloud State University (SCSU) Northeast Minnesota Index of Leading Economic Indicators. The leading economic indicator index (LEI) improved in the second quarter as in ...
CH 11 PDF
... unemployment, depending on how far above the marketclearing wage is the efficiency wage (Fig. 11.2) – The labor supply curve is upward sloping, while the labor demand curve is the marginal product of labor when the effort level is determined by the efficiency wage – The difference between labor supp ...
... unemployment, depending on how far above the marketclearing wage is the efficiency wage (Fig. 11.2) – The labor supply curve is upward sloping, while the labor demand curve is the marginal product of labor when the effort level is determined by the efficiency wage – The difference between labor supp ...
Real-Wage Rigidity - Pearson Higher Education
... – In the classical model, unemployment is due to mismatches between workers and firms – Keynesians are skeptical, believing that recessions lead to substantial cyclical employment – To get a model in which unemployment persists, Keynesian theory posits that the real wage is slow to adjust to equilib ...
... – In the classical model, unemployment is due to mismatches between workers and firms – Keynesians are skeptical, believing that recessions lead to substantial cyclical employment – To get a model in which unemployment persists, Keynesian theory posits that the real wage is slow to adjust to equilib ...
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.