ch 11, 12, 13 homework for final Macroeconomics(ACU Dr. Trent)

decrease AD decrease AD not change AD decrease AD increase AD decrease AD decrease AD

Classify the events according to their impact on aggregate demand A dramatic decline in the average price of houses will Increased concern that a recession is looming will An announcement by the central bank to maintain its existing monetary policy will a reduction in government spending will a dramatic improvement in the stock market, causing investors wealth to rise, will a recession occurring in a trading partners economy will an increase in income tax on individuals earning more than 450,000 per year will

a country where the minimum wage is set at 95% of the median wage

Comparison of the minimum wage and the median wage can be used to estimate the extent to which unemployment results from minimum wage laws. All else equal, which scenario would result in the most unemployment?

winner loser loser winner loser

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation. The Unites States federal govrngmtn, which has almost 15 trillion in debt in 2011 Karen, a retired school teacher, who relies on her fixed pension to cover her expenses Third National, a bank that lent many people money for home purchases Joe, who bored 40,000 to pay for her college education Herb, who keeps his savings in an old coffee can

The money supply can affect the growth rate of prices(inflation) in the long run the money supply cannot affect the growth rate of real GDP in the long run The money supply can affect the growth rate of the real GDP in the short run All of the above is the correct answer

What is the neutrality of money with respect to the quantity theory of money

2/75x100= 2.60

After a financial crisis hits the country of Barbaria, 2 million people become unemployed. If 75 million individuals are lucky enough to keep their jobs, what is the unemployment rate? Please specify your answer to two decimal places.

111 X 53= 5883 5883/822= 7.16v

Find the velocity of money when M= 822, P= 111, and Yr= 53 M is the money supply, v is the velocity of money, P is the price level and Yr is the real GDP

Increase in the unemployment rate: increase in the minimum wage and increase the unions influence decrease in the unemployment rate: decreased the unemployment benefits and intro of employment at will doctrine

Firms in the country of Merka, which experiences varying levels of unemployment over time, face a very competitive labor market. Classify the given events according to how each would affect Merka's unemployment rate.

Changes in the money supply can lead to permanent changed in aggregate demand, but changed in the velocity of money tend to have temporary changed in aggregate demand

How are the effects of an increase in the velocity of money and the effects of an increase in the money supply different?

the labor market in Europe is less flexible than in the United States

How do European labor markets compare to the labor market in the US asa result of these varying labor laws?

the larger the index number, the greater the long term unemployment

How does a country's rigidity employment index correspond to the amount of long term unemployment for that nation?

Shifted the LRAS curve to the left: a tsunami destroying much of the existing stock of capital in Japan, the 1970's oil crisis, significant and sustained increases in income tax rates Shifted the LRAS curve to the right: the Internet revolution of the 1970's, James Watt's invention of the steam engine in 1775 Did not shift LRAS: a central bank increasing the amount of money in circulation

How, if at all, did these events affect the long‑run aggregate supply (LRAS) curve? Each phrase should be placed under the appropriate heading.

the rate at which money circulates through an economy

In a macroeconomic context, choose the best definition for the term velocity

Inflation Price stability deflation Linda's money gained the most value

Peter is a compulsive gamer. He decides to buy World of Warcraft, all of its expansions, Starcraft 2, a PS3, a Wii, and an Xbox 360, since prices in general have been rising at an alarming rate. Melissa decides to start her own personal library by amassing a private collection of books and magazines about world religions, cooking, comics, and economics. As she reads an issue of The Economist, she discovers that overall price levels have changed only 0.01% in the past two years, and decides it does not matter whether she starts the project now or later. Linda postpones her wedding even though most food prices and most service prices were dropping this year, which would help keep the cost of the wedding down. Out of these individuals, whose money gained the most value during their time period?

Money supply + velocity = real GDP + inflation target 5.43 Inflation will be higher than originally expected

Suppose real GDP is forecasted to grow by 2.33%, the velocity of money has been stable, and the Fed announces an inflation target of 3.10%. What is the largest money growth rate the Fed could implement and still achieve its inflation target? Now suppose there is a mid-year revision of the GDP forecast that lowers the expected growth rate below 2.33%. Ceteris paribus, what impact will this lower growth rate have on the rate of inflation?

decrease since the baby boomers will opt for more leisure

Suppose that a baby boom occurs between the years 2025-2030, similar to the baby boom following World War II. what do you expect to happen to the labor force participation rate in the year 2090-2100, holding all else constant The labor force rate will

work test job search assistance early employment bonus job retraining

The government implements a new policy where people receiving unemployment benefits must provide proof that they are searching for work. Other wise, they will lose their benefits in 1 month. The government decides to give all unemployed workers a free account on a federal job bank, allowing workers to find jobs easier than every before and hopefully expediting re-employment Chelsea recently lost her job as an accountant. However, thanks to her stellar resume, she is able to quickly find a new job after two weeks. Much to her pleasure, she receive was tax credit because she was able to quickly find a Job. Simon is a junior chef at a there star Michelin renowned restaurant, Sur La Table. He loses his job and applies for and is accepted into, a state funded program, that allows unemployed individuals to take medical technician courses at their local community colleges for free

inflation will fall the growth will increase

The graph shows the aggregate demand (AD) curve and the long‑run aggregate supply (LRAS) curve for a hypothetical economy. Suppose that the economy observes an increase in the human capital of workers, causing productivity to rise. Show the effect of this change by shifting one of the curves in the graph. How will this change affect the rate of inflation how will this change affect the growth rate

frictional unemployment plus structural unemployment

The natural rate of unemployment equals

Unemployment rate= unemployed/labor force x 100 6/41x100= 14.63

The overall population for Region A is 100 million people. The labor force contains 41 million people, 35 million people are employed, and 6 million are unemployed. What is the unemployment rate? Round your answer to two decimals.

does not depend on the rate of inflation

The solow growth curve has this shape because growth

5.75- 2.00= 3.75 = I-pie 5.75+1.00= 6.75 = pie(expected) + rreal increased, so Herb feels poorer

There is a persistent fear that there will be a high level of deflation. Many economists warn that it may be worse for the economy than if there is high inflation. Suppose that Herb is in debt and has to pay a 5.75% nominal interest rate. He expected inflation to be 2.00%. Instead, inflation is −1.00% (deflation). What is the real interest rate that Herb expected to pay? Round your answer to two decimal places. What is the real interest rate that Herb is actually paying? Round your answer to two decimal places. Because the economy is experiencing deflation of −1.00% instead of inflation of 2.00%, Herb's real interest rate, compared to what he expected to pay, has

true

True or False: when the economy is doing well, a significant share of unemployment is frictional

Rreal- real interest rate I- nominal interest rate pie- rate of inflation Rreal= I- pie = 0.070-0.035= 0.035

Use Fisher Effect equation If the nominal rate is 0.070 and the inflation rate is 0.035, what is the real interest rate?

a real price refers to a price that has been adjusted to account for inflation

What is a real price

contributing factors: discovery of a large of rare metals used in manufacturing, an improvement in technology, coal price decrease not contributing factors: oil price increase, riots and political instability, increased consumer confidence, a major bird flu pandemic, an increase in exports

Which three factors could have caused this change in potential real GDP? Assume this is a typical economy relying on inputs such as coal and oil. All items should be placed as either a contributing factor or not a contributing factor.

employed: these who worked during the pervious week , people temporarily away from their jobs due to illness, people who temporarily away from their jobs due to vacation unemployed: people who do not have a job but actively looked in the last 4 weeks not in the labor force: full time students, active military service, full time home makers, people in prison, retirees who neither have a job nor are looking for a job, mental patients confined in institutions, people who have looked for jobs during the last 12 months but not last 4 weeks

people who considered employed, unemployed and not in labor force

changes in the money supply have no real effects on the economy in the long run Monetary policy is more effective in the short run rather than the long run

what does the term money neutrality mean? if the money is neutral, what does this imply about the use of monetary policy

the advent of the internet, which makes finding available jobs easier

what factors would decrease the rate of frictional employment

an increase in the overall price level a person whose salary has increased can purchase fewer goods and services

what is an inflation which of the following scenarios provides the best evidence that inflation has occurred?

menu cost nominal wage confusion real shock solow growth rate business fluctuations

what is the firms costs associated with changing their prices when workers respond, not to the purchasing power of their wage, but tot the face value of their wage or salary an event that changes the existing productivity and therefore changes the event to which economic growth occurs given flexible prices and the existing factors of production, a measure of how much the economy grows variations in the growth rate from the long run rate of economic growth

growth in the money supply + growth in velocity + inflation + real economic growth

what is the quantity theory of money equation

recessions

which of the choices is most directly directly related to cyclical unemployment