Answer to Question #182391 in Macroeconomics for medo

Question

41.Suppose that an auto company owned entirely by Canadian citizens opens a new facility in the U.S. Answer all three parts below. In each case, carefully explain your answer.

a) What sort of foreign investment would this represent?

b) What would be the effect of this investment on current Canadian Gross Domestic Product (GDP) and U.S. GDP?

c) What would be the effect of this investment on future per capita incomes in the United States?

44.a)  Explain the influence of each of the following on the natural rate of unemployment

 i.  Employment Insurance

 ii.  the minimum wage

 iii.  efficiency wages.

b) How would the natural rate of unemployment have been affected by the Covid-19 pandemic?

Answer 1

41.

a) It is foreign direct investment.

b) As a result of this investment current Canadian Gross Domestic Product (GDP) will not change and U.S. GDP will increase.

c) As a result of this investment future per capita incomes in the United States will increase.

44. a)

i.  Employment Insurance will increase the the natural rate of unemployment.

ii.  the minimum wage will decrease the natural rate of unemployment.

iii.  efficiency wages will increase the natural rate of unemployment.

b) The natural rate of unemployment increased as a result of the Covid-19 pandemic.