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During the COVID-19 pandemic, many high-income countries, including the US, extended the
a. Using the IS-LM-PC framework, please explain in detail the effects of this labor market policy (that is, extending unemployment insurance payments) on output, employment, inflation, real and nominal wages in the US.
b. Using the same framework, discuss in detail how the absence of such a policy would affect the same outcomes in Turkey.
c. If you were the policymaker, which policy or policies would you use to address this issue?
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- Assume Morocco is currently operating with an unemployment rate six percent above its natural rate of unemployment. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves. Label the equilibrium price level PL1 and the equilibrium real output Y1. Label the full-employment level of output YF. Where on a production possibilities curve representing full employment in Morocco would current output be—on, outside, or inside the PPC? What can be assumed about inflation based on the information above? Assume that the output gap is estimated to be $156 billion and the government decides to take action. If the marginal propensity to consume is 0.75, by how much would it need to change government spending to close the gap? Show your work. If instead, government chose to use the income tax to close the output gap rather than changes in spending, calculate the change in tax revenue the government would need to close the gap.…In the U.S., President Biden recently approved a $1.9 trillion stimulus package aimed at getting the economy going. U.S. workers who earned less than $ 75 000 a year in 2019 each received a $ 1 400 stimulus check over the past few weeks. Use the IS-LM-BP model to explain what this can mean for the levels of output/income and interest rates in South Africa. Draw the graph and explain the complete chain reactionIndicate whether each of the following statements is trueor false, and explain your reasoning. An intervention which raises nominal GDP will also decrease un-employment. Immigration into a country leads that country to focus more oncapital intensive goods.
- Changes in macroeconomic indicators can often be of relevance to business decision-making. For instance, changes in macroeconomic performance reflected in indicators can impact things such as firms profit forecasts, expected sales growth, expansion plans, etc.Assume you are employed as a business analyst with the large Australian based mining company. Identify and discuss how each of thefollowing macroeconomic issues may be relevant to the firm:a) A world-wide economic slow-down.b) Appreciation of the Australian dollar relative to other major currencies.c) The government abolishes subsidies to the mining industry.Assuming the inflation-rate rises, give one implication that this increased inflation rate would have on the import cost of creative stamps and craft pens from ChinaConsider Ricardian model with two countries, Home and Foreign, and three goods: Cloth, Food and Books. Labor is the only factor of production. Cloth and Food are freely traded between countries, whereas Books are non-tradable. Unit labor requirements in the Home country are 12 for Cloth, 3 for Food and 4 for Books. Unit labor requirements in the Foreign country are 2 for Cloth, 2 for Food and 3 for Books. The total amount of labor in the Home country is 1500, and the total amount of labor in the foreign is 1000. If the world price of Cloth is 18 and the world price of Food is 12, what is the price of Books in the Home country? [Insert the nearest integer.]
- Using ideas behind the specific model, intuitively explain how gains from trade for the overall economy do not necessarily translate into gains for every group within the economy. In the model, what are definite winners and losers. For whom are the gains unclear? 2. Briefly explain why the specific factors model is often considered a ‘short-run’ model. Give an example of a situation where it may also be valid for the ‘long-run’. 3. Briefly and intuitively explain the mechanisms and main results of the Heckscher-Ohlin Model. 4. In the context of the Heckscher-Ohlin Model, briefly explain Leontief’s Paradox and give examples of how the model can be reconciled with his finding. 5. Why is the bilateral trade balance not necessarily a good measure of the trade relationship between two countries? 6. Consider the (‘long run’) effects of inward labor migration in the Heckscher- Ohlin Model. Assume that the country trades and the relative price of two goods X and Y stays constant. Assume X is…A4 Assume Morocco is currently operating with an unemployment rate six percent above its natural rate of unemployment. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves. Label the equilibrium price level PL1 and the equilibrium real output Y1. Label the full-employment level of output YF. Where on a production possibilities curve representing full employment in Morocco would current output be—on, outside, or inside the PPC? What can be assumed about inflation based on the information above? Assume that the output gap is estimated to be $156 billion and the government decides to take action. If the marginal propensity to consume is 0.75, by how much would it need to change government spending to close the gap? Show your work. If instead, government chose to use the income tax to close the output gap rather than changes in spending, calculate the change in tax revenue the government would need to close the gap. Assume…A4 Assume Morocco is currently operating with an unemployment rate six percent above its natural rate of unemployment. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves. Label the equilibrium price level PL1 and the equilibrium real output Y1. Label the full-employment level of output YF. Where on a production possibilities curve representing full employment in Morocco would current output be—on, outside, or inside the PPC? What can be assumed about inflation based on the information above? Assume that the output gap is estimated to be $156 billion and the government decides to take action. If the marginal propensity to consume is 0.75, by how much would it need to change government spending to close the gap? Show your work. If instead, government chose to use the income tax to close the output gap rather than changes in spending, calculate the change in tax revenue the…
- A4 Assume Morocco is currently operating with an unemployment rate six percent above its natural rate of unemployment. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves. Label the equilibrium price level PL1 and the equilibrium real output Y1. Label the full-employment level of output YF. Where on a production possibilities curve representing full employment in Morocco would current output be—on, outside, or inside the PPC? What can be assumed about inflation based on the information above? Assume that the output gap is estimated to be $156 billion and the government decides to take action. If the marginal propensity to consume is 0.75, by how much would it need to change government spending to close the gap? Show your work. If instead, government chose to use the income tax to close the output gap rather than changes in spending, calculate the change in tax revenue the government would need to close the gap. Assume…The primary goal of effective macroeconomic policies is to reduce uncertainty and risk in economic decision-making and maintain healthy levels of economic growth and minimize price changes. What would be the response by the government for the following events and why? b) The labour market is expected to remain pressured in the near term on the back of surging COVID-19 cases and the reimposition of nationwide Movement Control Order (MCO 3.0).Macropoland, a country that is a natural gas and oil importer, has a natural rate of unemployment (at the full employment level of GDP) that is about 4.5%, and the long run average rate of inflation over time has been about 2%. However, during the period 1973-1974, the country experienced an inflation rate of about 15% while simultaneously experiencing unemployment of nearly 13%.At the present time, Macropoland is experiencing very sluggish consumption and investment (a result of a fall in the housing market), and unemployment has again edged up to around 9%. Inflation is very low at 0.4%.Macropoland has just hired you as their economic advisor. You have a big job ahead of you. Using your knowledge of aggregate demand and aggregate supply, can you explain what happened in these two time periods?Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical…