Macroeconomics Answers

Consider the effects of a government employment subsidy whereby the government paid 10 percent of the wages of newly hired workers. How would employment and output be affected by the program in the classical model? What would be the effect on the position of the aggregate supply schedule in Figure 3-6(Ch 3 Froyen)?

Suppose that, due for example to reconstruction after a war , the capital stock of a nation increases. Use the graphical framework of Figure3-4(CH 3 Froyen) to illustrate the effect that the increase in the capital stock would have an output, employment and the real wage in the classical model.

Provide examples of demand -side factors that would not affect the level of output and employment .

In microeconomics, we expect the supply curve for the firm to slope upward to the right when drawn against price .The classical aggregate supply curve is based on this microeconomic theory of the firm but is vertical .Why?

We termed the classical view of the labor market an auction market. What assumptions underlie this characterization ?

Suppose that the public's taste changes in such a way that leisure comes to be more desirable than commodities. How would you expect such a change to affect output, employment, and the real wage in the classical model ?

Explain the relationship between profit maximization condition and the labor demand as shown by equation MPNi=W/P?(Froyen CH 3 Eq-3.4)

Explain the relationship between inflation and unemployment both in the short run and long run.

A key feature of a macroeconomic model is whether it assumes that prices are flexible or sticky. According to most macroeconomists, models with flexible prices describe the economy in the long run, whereas models with sticky prices offer a better description of the economy in the short run. Which one of thoughts discussed above do you support? Why? Support your answer with evidence.

a person has 100 dollar to spend on two goods x and y whose respectively prices are 3 dollar and 5 dollar.

draw the budget line.