Search & Filtering
Suppose there are 180 million employed people and 20 million unemployed people.
a) What is the unemployment rate? (5 marks)
b) Suppose that 5 million unemployed people give up their search for jobs and become
discouraged workers. What is the new official unemployment rate?
billions and i as a percentage; a 5 percent interest rate implies i = 5.)
C 5 0.8(1 2 t ) Y (P1)
t 5 0.25 (P2)
I 5 900 2 50 i (P3)
−−G 5 800 (P4)
L 5 0.25 Y 2 62.5 i (P5)
−−My−
P 5 500
4.* a. Show that a given change in the money stock has a larger effect on output the less
interest-sensitive is the demand for money. Use the formal analysis of Section 11-5.
b. How does the response of the interest rate to a change in the money stock depend on the
interest sensitivity of money demand?
A) Use appropriate diagrams and explain how the LM curve is derived.
B) Use appropriate diagram explain underway circumstances monetary policy is
(i) Completely ineffective
(ii) Most effective
A) Explain fully the conditions on which a workers bargaining power depends.
B) Define a reservation wage and explain why firms want to pay more than the reservation wage.
C) use an illustrative diagram to show and explain how the natural rate of unemployment is affected by an increase in unemployment benefits.
b. How does the increase affect the equilibrium level of income?
c. How does the increase affect the equilibrium interest rate?
Explain fully the conditions on which a worker’s bargaining power depends.
Consider a hypothetical economy characterized by the following behavioral equation IS LM:
C=400-200r+0.2Y Md=Y-1000r
I= 240-400r Ms=800
G=200 P=2
a) derive the equations of the IS and LM curves of the economy
b) Find the equilibrium income level and the interest rate simultaneously.
1. Assume a closed economy and no government. Also assume consumption
C=50-0.8Yd and investment I=80
a) find the equilibrium output
b) what is the implied multiplier
Do as you are being directed.
1. Assume that our economy is in deep recession now due to Corona virus pandemic. What government
should to help economy revive according to:
a. Classical model
b. Keynesian model
c. Monetarist model
d. New classical model
Use graphs to elaborate your answers.
#340153 on Dec 2023