Under which of the following conditions does Say's law apply more accurately? Fast growth (versus slow growth) O Long run (versus short run) O High unemployment rate (vs low unemployment rate) O Low inflation rate (versus high inflation rate)
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- Elaborate on how one or more of the microeconomic components, namely consumption, investment, supply and demand for money influence macroeconomic outcomes and formulations of the following macroeconomic theories: Solow Growth Model The Mundell-Fleming model Neoclassical Model of Investment Use mathematical equations and graphs where necessary.Assume that the unemployment rate (U) equals 8 %. Suppose that the natural rate of unemployment (U*) equals 5 % and the coefficient σ is 0.6. Use Okun’s law to answer the following: A.) Find the output gap ratio to the potential output? B.) If the potential output equals 160, calculate the actual output?If the natural rate of unemployment was 6%, the current unemployment rate was 8%, and the potential GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed ___ billion in output not produced. A. 160 B. 240 C. 360 D. 480
- The typical sacrifice ration is considered to be 5% points of GDP lost for every 1% decline in inflation. Also , Okun's laws says that 1% point of unemployment translates into 2% point of GDP .Under the typical sacrifice ratio a reduction in inflation of 6% points would entail a 30% decline in GDP and a 15% increase in the unemployment rate . However, the recent crisis has forced the government to increase inflation by 3% in order to lower unemployment by 2%, then one could calculate the actual sacrifice ration in this case to be. a) a loss of 5% of GDP b) a gain of 4% of GDP c) a loss of 3.17% of GDP d) a gain of 1.33% of GDPBriefly explain how one or more of the microeconomic components, namely consumption,investment, supply and demand for money influence macroeconomic outcomes and formulations of the following macroeconomic theories:a. Solow Growth Model b. The Mundell-Fleming model c. Neoclassical Model of Investment Use mathematical equations and graphs where necessary.True or False? Okun’s Law relates cyclical unemployment to short-run output. True False
- However, the labor market is a derivative of the goods market in the Keynesian theory (“principle of effective demand”).Therefore, the unemployment is explained by the lack of demand in the goods market.According to the Keynesian theory, what would happen to the unemployment rate of real wages fall? How should unemployment be reduced?However, the labor market is a derivative of the goods market in the Keynesian theory (“principle of effective demand”). Therefore, unemployment is explained by the lack of demand in the goods market. According to the Keynesian theory, what would happen to the unemployment rate if real wages fall? How should unemployment be reduced?What actions might a business owner take during times of economic contraction? In other words, how might the economic indicators directly impact their actions?
- What is most likely to happen to inflation and real output growthif a government raises taxes and its economy has a year of excellentweather for growing crops? Illustrate your verbal answer with a graph.Label everything!Which one of the following statements are incorrect: a)Keynesian economists believe that the business cycle is caused by external factors, such as government interference in the economy b)classical economists believe that the market economies are inherently stable and fluctuations are ascribed to exogenous factors c)Classical economists believe that government should not intervene in the economy to try to smooth out the business cycle d)structuralist economists believe that the market system is neither inherently stable nor systematically unstableAn economy has an unemployment rate of 11% and real GDP grows by 2.5% annually. A treasury official says next year's expected growth rate of 4% is ecpected to bring down the enemployment rate to 8% within one year. However, an economists disagrees as it is non consistent with macroeconomic research. -who is correct? the treasury official or the economist and why?
