Macroeconomics Answers

Recently government of Turkey is willing to increase the demand for labor in the country. Write a
policy the government can use for this aim. Explain how according to neoclassical labor market
model, this policy will increase the demand. (Or alternatively, explain in which way neoclassical
model fail to capture the effect of the policy you mention.)

Starting with 1970’s according to many economists, rate of exploitation of the workers has
increased. Using the neoclassical definition of exploitation, write how this claim can be tested.

In 1990’s in Turkey, economy entered into depression. As a result unemployment rate throughout the country has risen. Most people have lost all their savings, and their income was so low, that they were only barely able to survive. How would you expect these developments to affect the interest rate (or discount rate) in general in Turkey?

Write when a company is likely to pay for the education of its workers?

In recent years, the collage costs in USA moved up. At the same time the wage difference between the high school students and collage graduates went up. How would you expect the expected effect of these trends to be on the number of students in USA who are willing to get collage education?

A manager believes that the demand for his product is given by the equation P=50-Q⁄100.
What is the arc elasticity of demand as price decreases from Rs.12 to Rs.10?
What is the arc elasticity of demand as price increases from Rs.10 to Rs.12?

(6) Describe the macroeconomic policies below:
1. Fiscal Policy.
2. Monetary Policy.
3. The Direct of Control.
4. The Policy of Supply-Side.

(9) Describe the intent of every inflation, explained how inflation occurs, whether the impression it causes and how to overcome it

1. cost-push inflation
2. Demand-pull inflation
3. Imported inflation

The economy is at full employment and an election is coming up. To make sure they’re all re-elected, various officials decide to increase government spending by $100 billion. Senator Graham says the money should be spent on improving education and transport systems. Senator Dole proposes building several very large Coast Guard training facilities in states that currently have none, including Kentucky, Nebraska, Nevada, and Arkansas.
a. What is the major difference between the spending plans of Senator Graham and Senator Dole?

3. Everyone loves a tax cut. How will the short-run effects of a tax cut on the price level and on unemployment differ if the economy is in a recession from the effects if the economy is at full employment? (Hint: Examine the slope of the AS curve.)

Apply your knowledge of the AD/AS model to predict the effect on economic variables (i.e., P, RGDP, interest rates, wages, savings and spending) of some events on the U.S. economy. Diagram the effect of the following events. Be sure to explain the effects in the short run and effects in the long run for each question, in words. To keep things clear, assume that in each case the economy starts out at long-run equilibrium.
d. Suddenly, foreign countries sell great quantities of important inputs such as steel and computer chips at very low prices in this country. Hint: the long-run effect will depend on whether the price decrease is permanent or not.