Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 29, Problem 11APA
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Describe the when-to-work decision if the technology advances.
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According to the real business cycle theory, productivity shocks are an important source of business cycles. Using the Cobb–Douglas production function and annual data since 1961, calculate and graph U.S. total factor productivity. Use real GDP for Y, the capital stock from the source listed in Table 3.1 for K, and civilian employment for N. Look for periods marked by sharp changes up or down in productivity. How well do these changes match up with the dates of business cycle peaks and troughs?
a. Why firms pay efficiency wage to their labor? b. According to efficiency wage model, how the efficiency wage and employment are determined? Explain by using graphs. c. Does the theory’s implication match with the business cycle facts about the cyclicality of efficiency wage? Why?
b. Explain in some detail the 4 phases of the business cycle, Please don’t include Depression as one of them. including the characteristics of each. Be thorough! You should have at least 4 characteristics for each phase! Include in your discussion on how each phase of the business cycle might impact your life.
Chapter 29 Solutions
Macroeconomics
Ch. 29.1 - Prob. 1RQCh. 29.1 - Prob. 2RQCh. 29.1 - Prob. 3RQCh. 29.1 - Prob. 4RQCh. 29.1 - Prob. 5RQCh. 29.2 - Prob. 1RQCh. 29.2 - Prob. 2RQCh. 29.2 - Prob. 3RQCh. 29.2 - Prob. 4RQCh. 29.2 - Prob. 5RQ
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- Only typed answer Which of the graphs most accurately illustrates real business cycle theory? Graph A Graph B Graph C Graph D Which of the graphs most accurately illustrates new classical theory (unanticipated policy, short run)? Graph A Graph B Graph C Graph Darrow_forwardwhat theories of business cycle is the very basis in identifying the status of the company. explain your answer.arrow_forwardQuestion1) a) A labor market is in steady state equilibrium with unemployment rate u = 0.04 and probability of re-employment per month λ = 0.12. What is the probability of becoming unemployed in a month? b) What is the size of the labor force when the number of unemployed is U = 20,000? How long does an unemployment spell last on average? c) An increase in unemployment benefits makes the duration of unemployment spells 10 months. What is the new level of unemployment? d) In a simple job search model, the probability of an unemployed worker finding a job (λ) is equal to the probability of receiving a job offer (µ) times the probability of accepting it (p). Assume that the reduction in λ from part a) to part c) is not due to changes in unemployment benefits, but rather due to changes in µ. If p remains constant at 0.2, what is the reduction in µ? e) It is not realistic to assume that p remains constant. Explain why. Assuming that the wage distribution is fixed, in which direction…arrow_forward
- TRUE/FALSE. Brietly explain your answer. a) The real business cycle model is very helptul because we can always identity the sources of total factor productivity shocks. b) An increase in financial market frictions can cause the natural rate of interest to increasearrow_forwardQ 1st part Describe the four phases of the classical business cycle 2nd part Explaining how employment is typically affected during each phase? do 2nd part connecting with part one I got the first part I want Dear Sir/Madam please help me explain part 2 by using my first part thanks Expansion: A speedup in the pace of economic activity defined by high growth, low unemployment, and increasing prices. The period marked from trough to peak. Peak: The upper turning point of a business cycle and the point at which expansion turns into contraction. Contraction: A slowdown in the pace of economic activity defined by low or stagnant growth, high unemployment, and declining prices. It is the period from peak to trough. Trough: The lowest turning point of a business cycle in which a contraction turns into an expansion. This turning point is also called Recovery.arrow_forward1) What is the basic structure of the Austrian Business Cycle (i.e. what causes the business cycle, what happens during the business cycle, what are the results)? 2) Why is the Market For Loanable Funds that we studied earlier in our class important for understanding the Austrian Business Cycle theory? 3) How can the Austrian Business Cycle be used to explain the Great Recession of 2008 and the crash of the housing market?arrow_forward
- Suppose that in Workaholia the total population = 240 million, 60 million people are ineligible to work, and 40 million people are eligible to work but choose not to. If the number of Unemployed is 5 million, how much cyclical unemployment is there in Workaholia? Select one: a. 2.37% b. 1.43% c. 0.0% d. - 1.43% e. - 2.37%arrow_forward9. Which of the following are stages of the business cycle? Select all that apply. A. trough B. peak C. stagflation D. valley E. supply shockarrow_forwardUnemployment rates have been higher in many European countries in recent decades than in the United States. Is the main reason for this long-term difference in unemployment rates more likely to be cyclical unemployment or the natural rate of unemployment? Explain briefly.arrow_forward
- Do you think perfect indexing is possible? Why or why not?arrow_forwardWhat are the different policy tools for dealing with cyclical unemployment?arrow_forwardThink about the business cycle: during a recession, unemployment increases; it decreases in an expansionary phase. Explain what happens to TANF, SNAP, and Medicaid programs at each phase of the business cycle (recession, trough, expansion, and peak).arrow_forward
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