Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 21, Problem 37CTQ
Do you think it is rational for workers to prefer sticky wages to wage cuts, when the consequence of sticky wages is
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Do you think it is rational for workers to prefer sticky wages to wage cuts, when the consequence of sticky wages is unemployment for some workers? Why or why not? How do the reasons for sticky wages explained in this section apply to your argument?
Assume that you were working in a bar before the Covid-19 pandemic. Suppose that you lost your job as soon as the COVID–19 pandemic hit the economy. Given that many non-essential industries have shut down following the government order, what is your likely behavior in the labor market? How reliable is the unemployment rate during the pandemic in assessing the labor market tightness? Explain.
If output is below its natural rate, there will be pressure for wages to __________ because unemployment is ____________.
Chapter 21 Solutions
Principles of Economics 2e
Ch. 21 - Suppose the adult population over the age of 16 is...Ch. 21 - Using the above data, what is the unemployment...Ch. 21 - Over the long term, has the U.S. unemployment rate...Ch. 21 - Whose unemployment rates are commonly higher in...Ch. 21 - Beginning in the 1970s and continuing for three...Ch. 21 - Is the increase in labor force participation rates...Ch. 21 - Many college students graduate from college before...Ch. 21 - What is the difference between being unemployed...Ch. 21 - How do you calculate the unemployment rate? How do...Ch. 21 - Are all adults who do not hold jobs counted as...
Ch. 21 - If you an? out of school but working part time,...Ch. 21 - What happens to the unemployment rate when...Ch. 21 - What happens to the labor force participation rate...Ch. 21 - What are some of the problems with using the...Ch. 21 - What criteria do the BLS use to count someone as...Ch. 21 - Assess whether the following would be counted as...Ch. 21 - Are U.S. unemployment rates typically higher,...Ch. 21 - Are U.S. unemployment rates distributed evenly...Ch. 21 - When would you expect cyclical unemployment to be...Ch. 21 - Why is there unemployment in a labor market with...Ch. 21 - Name and explain some of the reasons why wages are...Ch. 21 - What term describes the remaining level of...Ch. 21 - What forces create the natural rate of...Ch. 21 - Would you expect the natural rate of unemployment...Ch. 21 - Would you expect the natural rate of unemployment...Ch. 21 - What is frictional unemployment? Give examples of...Ch. 21 - What is structural unemployment? Give examples of...Ch. 21 - After several years of economic growth, would you...Ch. 21 - What type of unemployment (cyclical, frictional,...Ch. 21 - Using the definition of the unemployment rate, is...Ch. 21 - Is a decrease in the unemployment rate necessarily...Ch. 21 - If many workers become discouraged from looking...Ch. 21 - Would you expect hidden unemployment to be higher,...Ch. 21 - Is the higher unemployment rates for minority...Ch. 21 - While unemployment is highly negatively correlated...Ch. 21 - Why do you think that unemployment rates are lower...Ch. 21 - Do you think it is rational for workers to prefer...Ch. 21 - Under what condition would a decrease in...Ch. 21 - Under what condition would an increase in the...Ch. 21 - As the baby boom generation retires, the ratio of...Ch. 21 - Unemployment rates have been higher in many...Ch. 21 - Is it desirable to pursue a goal of zero...Ch. 21 - Is it desirable to eliminate natural unemployment?...Ch. 21 - The U.S. unemployment rate increased from 4.6 in...Ch. 21 - A country with a population of eight million...Ch. 21 - A government passes a family-friendly law that no...Ch. 21 - As the baby boomer generation retires, what should...
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- Are wages more sticky upwards or downwards? Why? Explain.arrow_forwardWhat are the two biggest recessions in terms of length and magnitude from the graph, the shaded areas show recession and 2020 is not included? How does the unemployment rate react during the two main recessions you have identified? What was the level of the unemployment rate during the first and the last quarter of negative growth for those two recessions? What do you conclude about the link between recession and the variation in unemployment?arrow_forwardWhich of the following is a reason for sticky wages? A. Fiscal Policy B. Monetary Policy C. Aggregate Demand D. Long-term Contracts E. All of the abovearrow_forward
- Consider an economy (call it country G) that is implementing climate change legislation more rapidly than other countries (refer to them as ‘row’ for ‘rest of the world’). Explain how this decision by country G could affect its long-run markup. Using diagrams, explain your forecast for the effect of this decision on real wages, inequality and employment in G in the new equilibrium. In the light of your findings, what advice would you give to a policy maker in G?arrow_forwardWhat is the current unemployment rate in the United States as of January 2021? What was the unemployment rate in the United States in January 2020? How has the pandemic affected the unemployment rate from January 2020 to the present?arrow_forwardSome economists believe that a reduction in the level of economic activity and an increase in unemployment are inevitable.’ Use the extracts and your knowledge of economics to assess the view that when an economy experiences a negative economic shock there will always be a sustained increase in unemployment.arrow_forward
- Suppose that, in an attempt to combat severe unemployment, the government decides to increase the amount of money in circulation in the economy. This monetary policy action demand for goods and services in the economy, leading to prices for products. In the short run, the change in prices induces firms to produce goods and services. This, in turn, leads to a unemployment level. Based on this analysis, the economy faces the following trade-off between inflation and unemployment: Higher inflation leads to unemployment. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardPlease select the correct answer, there is only one possible answer to each question If the economy producing at below full employment, the the output gap called Answer 1 when the economy producing in close economy then there will be no Answer 2 The total number of workers, which is the sum of the unemployed and the employed Answer 3 Workers who stop looking for work due to an unsuccessful Search Answer 4 The sum of frictional and structural unemployment called Answer 5 If the economy producing at above full employment, the the output gap called Answer 6 An institution designed to regulate the banking system and money supply Answer 7 Trading goods and services directly for goods and services Answer 8 The interest rate that Central bank charges on loans to commercial banks called Answer 9 The minimum legal percent of deposits that banks must hold as reserves Answer 10 the chooses is : Recessionary gap discount rate…arrow_forwardExplain why wages are more rigid (or sticky) when price level falls rather than when price level increases. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
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