14.02 Principles of Macroeconomics Problem Set 2 Solutions Spring 2003
... this environment, monetary policy will no longer have an effect on output even in the short run. True. In this case P=Pe even in the short run. The AS curve is consequently vertical in the short and medium run. 6. An increase in the interest rate leads workers to ask for higher wages, leading to a s ...
... this environment, monetary policy will no longer have an effect on output even in the short run. True. In this case P=Pe even in the short run. The AS curve is consequently vertical in the short and medium run. 6. An increase in the interest rate leads workers to ask for higher wages, leading to a s ...
Name:
... Question 2: What is “inflation targeting,” and how does it differ from “artful management?” What are the main benefits of inflation targeting, according to its supporters? Why do many economists feel it is unnecessary or even undesirable? Answer: An inflation targeting policy would have the Fed anno ...
... Question 2: What is “inflation targeting,” and how does it differ from “artful management?” What are the main benefits of inflation targeting, according to its supporters? Why do many economists feel it is unnecessary or even undesirable? Answer: An inflation targeting policy would have the Fed anno ...
unemployement
... are more likely to attempt suicide than the rest of the adult population Long periods of unemployment reduce the value of human capital. When people are out of work, their skills can become rusty, and they miss out on training in new methods. ...
... are more likely to attempt suicide than the rest of the adult population Long periods of unemployment reduce the value of human capital. When people are out of work, their skills can become rusty, and they miss out on training in new methods. ...
14.02 Principles of Macroeconomics Problem Set 1 Solutions Spring 2003
... In practice, the unemployment rate does tend to move quite strongly with changes in output. And unemployment is still considered to be very useful, both as a measure of whether the economy is operating above or below its normal level of activity, and as a measure of social welfare (see the discussio ...
... In practice, the unemployment rate does tend to move quite strongly with changes in output. And unemployment is still considered to be very useful, both as a measure of whether the economy is operating above or below its normal level of activity, and as a measure of social welfare (see the discussio ...
Chapter 12
... industries might reach capacity at the same time Cost pressures might lead to higher output prices Shape of l-segment is important to understanding inflation ...
... industries might reach capacity at the same time Cost pressures might lead to higher output prices Shape of l-segment is important to understanding inflation ...
AP Econ Study Guide
... The important part of this, is that you use a vertical section or a separate long-run vertical AS curve, which shows the full employment (Natural Rate of Unemployment at the bottom of LRAS) ...
... The important part of this, is that you use a vertical section or a separate long-run vertical AS curve, which shows the full employment (Natural Rate of Unemployment at the bottom of LRAS) ...
Chapter 21
... People who become unemployed are • Job losers—people who are laid off from their jobs • Job leavers—people who voluntarily quit their jobs • Entrants and reentrants—people who have just left school or who are now looking for a job after a period out of the labor force. ...
... People who become unemployed are • Job losers—people who are laid off from their jobs • Job leavers—people who voluntarily quit their jobs • Entrants and reentrants—people who have just left school or who are now looking for a job after a period out of the labor force. ...
File
... Fighting a Recession with Monetary Policy The Fed can lower the reserve requirement. This will increase the amount of excess reserves available for banks to lend out. The Fed can lower the Discount rate. This will make it less expensive for banks to borrow, therefore they will likely lend out more. ...
... Fighting a Recession with Monetary Policy The Fed can lower the reserve requirement. This will increase the amount of excess reserves available for banks to lend out. The Fed can lower the Discount rate. This will make it less expensive for banks to borrow, therefore they will likely lend out more. ...
ECONOMICS.PPTs_Ch23.Lecture
... Structural Unemployment Structural unemployment: more people are seeking jobs in a particular labor market than there are jobs available at the current wage rate, even when the economy is at the peak of the business cycle. ...
... Structural Unemployment Structural unemployment: more people are seeking jobs in a particular labor market than there are jobs available at the current wage rate, even when the economy is at the peak of the business cycle. ...
Ch16-- Macroeconomic Viewpoints
... The equilibrium price level is determined by the money supply. Full employment is the norm Supply creates its own demand – The classical view prevailed before the ...
... The equilibrium price level is determined by the money supply. Full employment is the norm Supply creates its own demand – The classical view prevailed before the ...
Economic Growth, Business Cycles, Unemployment, and Inflation
... Inflation may not make a nation poorer. It can redistribute income from those who do not raise their prices to those who do. It can reduce the amount of information that prices are supposed to convey. ...
... Inflation may not make a nation poorer. It can redistribute income from those who do not raise their prices to those who do. It can reduce the amount of information that prices are supposed to convey. ...
Unemployment
... and GDP is expressed by Okun’s Law. • Okun’s Law says that the percentage change in real GDP equals 3% - 2 times the change in the unemployment rate. Why? – GDP has grown over the long run by 3%, and Okun found that for every 1% increase in unemployment real GDP growth fell by 2%. ...
... and GDP is expressed by Okun’s Law. • Okun’s Law says that the percentage change in real GDP equals 3% - 2 times the change in the unemployment rate. Why? – GDP has grown over the long run by 3%, and Okun found that for every 1% increase in unemployment real GDP growth fell by 2%. ...
Macro2 Exercise #2
... Is this economy above, below or at full employment? ______________________________ __________. Do a significant number of economists consider an unemployment rate that is at or below 4% to be “acceptable”? ___ (Yes, No). Starting from a balanced budget, if the administration wants to control inflati ...
... Is this economy above, below or at full employment? ______________________________ __________. Do a significant number of economists consider an unemployment rate that is at or below 4% to be “acceptable”? ___ (Yes, No). Starting from a balanced budget, if the administration wants to control inflati ...
Parkin-Bade Chapter 19
... Origins and Issues of Macroeconomics Economists began to study economic growth, inflation, and international payments during the 1750s. Modern macroeconomics dates from the Great Depression, a decade (1929-1939) of high unemployment and stagnant production throughout the world economy. John Maynard ...
... Origins and Issues of Macroeconomics Economists began to study economic growth, inflation, and international payments during the 1750s. Modern macroeconomics dates from the Great Depression, a decade (1929-1939) of high unemployment and stagnant production throughout the world economy. John Maynard ...
ch16, lecture
... a. people who have jobs continue to look for better ones. b. the armed forces are included. c. discouraged workers are not counted. d. of all of the above. C. A person can quit looking for a job because he is discouraged after trying to find one, but wants to work if he could find a job, yet this pe ...
... a. people who have jobs continue to look for better ones. b. the armed forces are included. c. discouraged workers are not counted. d. of all of the above. C. A person can quit looking for a job because he is discouraged after trying to find one, but wants to work if he could find a job, yet this pe ...
21.1 labor market indicators
... Part-time work is attractive to workers because they: • Balance family with work Part-time work is attractive to employers because: • Benefits are not paid to part-time workers • Less government regulation of part-time workers ...
... Part-time work is attractive to workers because they: • Balance family with work Part-time work is attractive to employers because: • Benefits are not paid to part-time workers • Less government regulation of part-time workers ...
Lecture 4 Business Cycles and Aggregate Supply and
... - Real GDP rises - Business investment rises - Labour demand increases and unemployment falls - Inflation becomes high - Interest rate rises ...
... - Real GDP rises - Business investment rises - Labour demand increases and unemployment falls - Inflation becomes high - Interest rate rises ...
9 Revision – Unemployment
... Which are the most effective policies? Remember that it depends upon the type of unemployment involved. However, the types of equilibrium unemployment (frictional, structural and seasonal) may ONLY be cured by supplyside policies. Real-wage unemployment may be cured by supply-side or expansionary de ...
... Which are the most effective policies? Remember that it depends upon the type of unemployment involved. However, the types of equilibrium unemployment (frictional, structural and seasonal) may ONLY be cured by supplyside policies. Real-wage unemployment may be cured by supply-side or expansionary de ...
Study Questions concerning the Phillips Curve
... 1) Neutrality of Money suggests that a. If the Fed expands the money supply and increases inflation, unemployment decreases b. If the Fed expands the money supply and increases inflation, unemployment increases c. If the Fed expands the money supply and increases inflation unexpectedly, unemployment ...
... 1) Neutrality of Money suggests that a. If the Fed expands the money supply and increases inflation, unemployment decreases b. If the Fed expands the money supply and increases inflation, unemployment increases c. If the Fed expands the money supply and increases inflation unexpectedly, unemployment ...
Stage 2 Semester 1 Examination Marking Key 2011 Penrhos College
... a) the increase in the cash rate from 3.00% to 4.50% over the same period. b) the increase in the value of the Australian dollar from 81 US cents to 90 US cents over the same period. c) the increase in the inflation rate from 1.5% to 2.1% over the same period. d) the increase in the rate of economic ...
... a) the increase in the cash rate from 3.00% to 4.50% over the same period. b) the increase in the value of the Australian dollar from 81 US cents to 90 US cents over the same period. c) the increase in the inflation rate from 1.5% to 2.1% over the same period. d) the increase in the rate of economic ...
Economics 203/Quiz 5
... c. usually, the money is spent so quickly as to have little impact d. none of the above 13. In the November 2010 monetary stimulus a. the Fed injected about $600 billion dollars into the economy b. the Treasury sold about $1 trillion in additional government bonds c. the Fed extended special loans t ...
... c. usually, the money is spent so quickly as to have little impact d. none of the above 13. In the November 2010 monetary stimulus a. the Fed injected about $600 billion dollars into the economy b. the Treasury sold about $1 trillion in additional government bonds c. the Fed extended special loans t ...
chapter 5 problems
... b) Tornadoes destroy many factories in the country, while a severe drought ruins many crops. c) Miraculous new technological developments raise productivity in manufacturing. d) Because of worries over the deficit, the government sharply curtails its expenditures on social programs. 2. Is it more li ...
... b) Tornadoes destroy many factories in the country, while a severe drought ruins many crops. c) Miraculous new technological developments raise productivity in manufacturing. d) Because of worries over the deficit, the government sharply curtails its expenditures on social programs. 2. Is it more li ...
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.