Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 7, Problem 7PA
(a)
To determine
Relationship between wage rates in two sectors.
(b)
To determine
Wage rate and employment.
(c)
To determine
Employment in the manufacturing sector.
(d)
To determine
New wage rate and employment in service sector.
(e)
To determine
An economy’s
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Consider a state, its economy is largely based on two sectors, e.g. manufacturing and services. Most of local labor forces are employed in either automobile manufacturers or traditional service industries (catering, education, retail and state employees). At state level, total employment is 1.6 million (or 1600 thousand). Demand functions for labor force in manufacturing (M) and service (S) are given as following.
Demand for labor in manufacturing (thousand), with wage as Wm ($/week).
M = 4000 – 3 * Wm.
Demand for labor in service (thousand), with wage as Ws ($/week).
S = 2000 – 2 * Ws.
As above, total employed labor is 1,600 (thousand), so we have M + S = 1600 (thousand). Then finish the following questions.
(1) If labor forces are free to move between manufacturing and service sectors, what relationship is between wages in manufacture and service sectors, Wm and Ws (higher, lower or the same)? And why?
(2) Following the condition in…
Consider a diagram in which employment is measured in the horizontal axis, and real wage is measured in the vertical axis. Which of the following questions about the labour supply and wage setting curves is correct?
Select one:
a. For any real wage, the wage setting curve shows the amount of labour that will be supplied.
b. The wage-setting curve shows the real wage necessary at each level of economy-wide employment to provide workers with incentives to work hard and well.
c. None of the listed answers is correct.
d. Where the wage-setting and labour supply curves intersect, all unemployment is voluntary.
Cuts in public expenditure do not guarantee a reduction in the government’s deficit because:
Select one:
a. None of the listed answers is correct.
b. Firms will try to pay less tax.
c. Aggregate demand falls, and firms invest less.
d. There is a fall in autonomous consumption.
e. Aggregate demand will fall, reducing government revenue.
There are 10 cars on…
What is the impact on the labour market due to a reduction in income tax rate?
Select one:
a.
labour supply shifts to the left; wage rate increases and level of employment is lower
a. labour supply shifts to the left; wage rate increases and level of employment is lower
b.
labour demand shifts to the right; wage rate increases and level of employment increases
b. labour demand shifts to the right; wage rate increases and level of employment increases
c.
labour supply shifts to the right; wage rate decreases and level of employment is higher
c. labour supply shifts to the right; wage rate decreases and level of employment is higher
d.
labour demand shifts to the left; wage rate decreases and level of employment decreases
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