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Macroeconomics
Many economists pointed out that in the 2008 recession V (velocity) fell
dramatically.
a. Why would V fall?
b. What would this do to Q or P (= MV, or V=PQ/M)?
c. Is your answer consistent with what actually happened?
d. Explain
dramatically.
a. Why would V fall?
b. What would this do to Q or P (= MV, or V=PQ/M)?
c. Is your answer consistent with what actually happened?
d. Explain
Macroeconomics
The labor demand curve is L = 21 − w, where w denotes real wage. Wage negotiations are based on expected prices. At the beginning of a period trade unions and employers negotiate wages, which remain fixed for the entire period. Expected prices are P^e = 4 and nominal wages are W = 20. Determine the expected output for the (partial) production function Y (L) = 21L − 0.5L^2.
=> Y^e = ?
=> Y^e = ?
Macroeconomics
Involuntary unemployment can be caused by ... (several answers possible)
(a) a minimum wage.
(b) introduction of higher taxes.
(c) lowering taxes.
(d) employment protection legislation.
(a) a minimum wage.
(b) introduction of higher taxes.
(c) lowering taxes.
(d) employment protection legislation.
Macroeconomics
Aggregate supply curve ... (several answers possible)
(a) is vertical in the long run because, in the long term, expected prices are equal to the actual ones.
(b) is moved to the right if the potential output rises.
(c) shows a positive relationship between the price level and output in the short run.
(d) is not affected by the expectations formation processes.
(a) is vertical in the long run because, in the long term, expected prices are equal to the actual ones.
(b) is moved to the right if the potential output rises.
(c) shows a positive relationship between the price level and output in the short run.
(d) is not affected by the expectations formation processes.
Macroeconomics
Wage stickiness ... (several answers possible)
(a) gives rise to a positively sloped short run AS curve. (b) is caused by long term working contracts.
(c) exists only for real wages.
(d) is an example of the so called ‘nominal stickiness’.
(a) gives rise to a positively sloped short run AS curve. (b) is caused by long term working contracts.
(c) exists only for real wages.
(d) is an example of the so called ‘nominal stickiness’.
Macroeconomics
Efficiency wages can hel to reduce unit labor costs when ...(several answers possible)
(a) the labor productivity nonlinearly depends on the wage.
(b) the labor productivity rises faster than the wage increment.
(c) the elasticity of productivity with respect to the wage is larger than unity.
(d) the elasticity of productivity with respect to the wage is positive but less than unity.
(a) the labor productivity nonlinearly depends on the wage.
(b) the labor productivity rises faster than the wage increment.
(c) the elasticity of productivity with respect to the wage is larger than unity.
(d) the elasticity of productivity with respect to the wage is positive but less than unity.
Macroeconomics
The insider-outsider theory of unemployment says that ...(several answers possible)
(a) trade unions do not internalize sufficiently the well-being of the unemployed.
(b) trade unions can be a cause for involuntary unemployment.
(c) trade unions tend to increase wages above the competitive level.
(d) the position of trade unions should be bolstered in order to lower unemployment.
(a) trade unions do not internalize sufficiently the well-being of the unemployed.
(b) trade unions can be a cause for involuntary unemployment.
(c) trade unions tend to increase wages above the competitive level.
(d) the position of trade unions should be bolstered in order to lower unemployment.
Macroeconomics
Efficiency wages ... (several answers possible)
(a) are irrelevant for low skilled workers.
(b) are higher than market clearing wage.
(c) do not cause unemployment.
(d) are sometimes paid by employers to reduce shirking or turnover costs.
(a) are irrelevant for low skilled workers.
(b) are higher than market clearing wage.
(c) do not cause unemployment.
(d) are sometimes paid by employers to reduce shirking or turnover costs.
Macroeconomics
In the classical labor market model ...
(a) there is no unemployment
(b) there is no voluntary unemployment (c) there is no involuntary unemployment (d) employment is equal to labor supply
(a) there is no unemployment
(b) there is no voluntary unemployment (c) there is no involuntary unemployment (d) employment is equal to labor supply
Macroeconomics
The production function Y = AKαLβ with A = 2, α = 0.4 and β = 0.6 exhibits the following
properties:
(a) concavity in L
(b) convexity in L
(c) constant returns to scale in K and L (d) homogeneity of degree 1 (in K and L) (e) increasing returns in K and L
properties:
(a) concavity in L
(b) convexity in L
(c) constant returns to scale in K and L (d) homogeneity of degree 1 (in K and L) (e) increasing returns in K and L
