Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 3AP
a)
To determine
The impact of high real wage on
b)
To determine
The effect of real wage rigidity on the output supplied by firms.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
On January 1st 2019, South Africans first-ever national minimum wage came into effect.the legislation stipulated a minimum wage rate of R20 per hour or R3500 per month depending on the number of hours worked. However some economists warned that it may depress S. A's already high unemployment rate further by making it more expensive to hire workers. 1.Using your knowledge of basic economic theory, illustrate and explain with the aid of a graph, why some economists might have given such a warning?
2.what are common arguments offered for and against the minimum wages?
3. Have they been correct so far in the prediction that a national wage will depress S. A's already high unemployment rate? Explain
The college graduates of 2000 could hardly have asked for better luck. The unemployment ratedropped to 4.1 % in May 2000- roughly, the lowest level in a generation- and employers wereliterally scrambling for new hires. Starting salaries rose, many graduating seniors had numerousjob offers, and some firms even offered $10,000- $20,000 bonuses to students who signed thedotted line.
Three years later, the job market for the Class of 2003 was rather different. U.S. economicĀ growth had slowed to a crawl, and then to a halt. Companies that had stocked up on recentĀ college grads in the tighter labour markets of 1998-2000 found themselves with more than theyĀ knew what to do with in 2002 and 2003. They were not eager to hire more. Bonuses and otherĀ āperksā disappeared; job offers became scarcer. With the unemployment rate around 6% in MayĀ and June of 2003, the job market was far from the worst ever. But it was nothing like the gloryĀ days of 2000.
Ā
Discussion:(i) Briefly explain and justifyā¦
Part (a):Suppose that the demand for the Dates and supply of the Dates in Ramadan both are declined byequal amount over some period of time. What you can conclude with this information? Explainand graphically show the effect on equilibrium price and equilibrium quantity.Part (b):Why is money not considered to be a capital resource in economics and why is entrepreneurialability considered to be a part of economic resource, distinct from labor? Please suggest two mostimportant function of entrepreneurs, you think is must?
Chapter 3 Solutions
Macroeconomics
Ch. 3 - Prob. 1RQCh. 3 - Prob. 2RQCh. 3 - Prob. 3RQCh. 3 - Prob. 4RQCh. 3 - Prob. 5RQCh. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQ
Ch. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Prob. 15RQCh. 3 - Prob. 1NPCh. 3 - Prob. 2NPCh. 3 - Prob. 3NPCh. 3 - Prob. 4NPCh. 3 - Prob. 5NPCh. 3 - Prob. 6NPCh. 3 - Prob. 7NPCh. 3 - Prob. 8NPCh. 3 - Prob. 9NPCh. 3 - Prob. 10NPCh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Prob. 4APCh. 3 - Prob. 5APCh. 3 - Prob. 6APCh. 3 - Prob. 7AP
Knowledge Booster
Similar questions
- Beginning in the 1970s and continuing for three decades, women entered the U.S. labor force in a big way. If we assume that wages are sticky in a downward direction, but that around 1970 the demand for labor equaled the supply of labor at the current wage rate, what do you imagine happened to the wage rate, employment, and unemployment as a result of increased labor force participation?arrow_forwardIf you an? out of school but working part time, are you considered employed or unemployed in U.S. labor statistics? If you are a full time student and working 12 hours a week at the college cafeteria are you considered employed or not in the labor force? If you are a senior citizen who is collecting social security and a pension and working as a greater at Wal-Mart are you considered employed or not in the labor force?arrow_forwardWhile unemployment is highly negatively correlated with the level of economic activity, in the real world it responds with a lag. In other wands, firms do not immediately lay off workers in response to a sales decline. They wait a while before responding. Similarly, firms do not immediately hire workers when sales pick up. What do you think accounts for the lag in response time?arrow_forward
- Please no written by hand solutions Suppose that the markup of goods prices over marginal cost is 5%, and that the wage-setting equation is W= P(1-u), where u is the unemployment rate. Ā a. What is the real wage, as determined by the price-setting equation? Ā b. What is the natural rate of unemployment? c. Suppose that the markup of prices over costs increases to 10%. What happens to the natural rate of unemployment? Explain the intuition behind your answer.arrow_forward(a) Explain the difference between the nominal wage and the real wage. Using a wage setting curve and aprice setting curve illustrate how the real wage determines the equilibrium level of employment in theeconomy. (b) On a new diagram use a wage setting curve and a price setting curve to illustrate the change to theequilibrium level of employment if there is a reduction in the degree of competition faced by firms. Clearlystate what will occur to the real wage and the level of unemployment. (c) Suppose the economy has low aggregate demand with high unemployment. Use a new wage setting curveand price setting curve diagram to explain how the economy could automatically adjust back to equilibrium.Would this occur in reality? Justify your answer.arrow_forwardEconomists use labor-market data to evaluate how well an economy is using its most valuable resourceā its people. Two closely watched statistics are the unemployment rate and the employmentāpopulation ratio (calculated as the percentage of the adult population that is employed). Explain what happens to each of these in the following scenarios. In your opinion, which statistic is the more meaningful gauge of how well the economy is doing? Ā Situations unemployment rate employmentāpopulation ratio More meaningful one a. An auto company goes bankrupt and lays off its workers, who immediately start looking for new jobs Ā Ā Ā b. After an unsuccessful search, some of the laid-off workers quit looking for new jobs. Ā Ā Ā c. Numerous students graduate from college but cannot find work. Ā Ā Ā d. Numerous students graduate from college and immediately begin new jobs. Ā Ā Ā e. A stock market boom induces newly enriched 60-year-old workers to take early retirement.ā¦arrow_forward
- Suppose that Congress or your country's Legislature passes legislation making it more difficult for firms to fire workers during this COVID-19 period. (An example is a law requiring severance pay for fired workers.) If this legislation reduces the rate of job separation without affecting the rate of job finding, how would the natural rate of unemployment change? Do you think that it is plausible that the legislation would not affect the rate of job finding? Why or why not?arrow_forwardAssuming the equilibrium unemployment rate is 5%, if actual output falls to 5 percentage points below potential output, how would you expect the unemployment rate to change? (Hint: Use Okunās rule of thumb.)arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStaxPrinciples of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage LearningEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
- Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Macroeconomics (MindTap Course List)EconomicsISBN:9781305971509Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning