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Discuss in detail the expectation on prices by labor suppliers under the following theories:
1.Keynesian Theory
2.New Classical Economics
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- Explain the concept of excess demand in macroeconomics. Also, explain the role of open market operation in correcting it. (Kinly explain with diagram)Assume that the economy is in a recession and demand for labor is falling. Assume that wages are sticky. Draw a supply and demand graph that represents the labor market. Draw a graph that depicts what has happened to our demand and supply curves in the labor market, including our new equilibrium price and quantity of labor. Will the market experience an increase or a decrease in unemployment? Make sure you clearly label your graph, all of its components, and any curve shifts are clearly marked with the beginning and ending curves (you can use 0 and 1 or 1 and 2 to designate the first and the second curves).Suppose gold (G) and silver (S) are substitutes for each other because both serve as hedges against inflation. Suppose also that the supplies of both are fixed in the short run (Q = 90 and Q = 300) and that the demands for gold and silver are given by the following equations: PG = 990 - Qg +0.50PS and Ps = 630 -Qs +0.50PG What the the equilibrium prices of gold and silver? The equilibrium price of gold is $ 1420 and the equlibrium price of siliver is $ 1040. (Enter your responses rounded to two decimal places.) What if a new discovery of gold doubles the quantity supplied to 180? How will this discovery affect the prices of both gold and silver? The equilibrium price of gold will be $ and the equlibrium price of siliver will be $
- Assume that the labour demand equation for a fictional country is L = 90 – 2(w), where w is the wage per hour worked. Also, assume that the labour supply equation for that country is Ls = 0.5(w). Instructions: Round your answers to the nearest whole number. a. The equilibrium wage is $ , and the equilibrium quantity of labour employed is workers. b. At the equilibrium wage, | people are unemployed. c. If the supply of workers increased, the number of unemployed would: O stay the same as long as the wage is free to quickly adjust. O decrease. O increase.In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-wage theory asserts that output prices adjust more quickly to changes in the price level than wages do, in part because of long-term wage contracts. Suppose a firm signs a contract agreeing to pay its workers $15 per hour for the next year, based on an expected price and the wages the firm pays its level of 100. If the actual price level turns out to be 110, the firm's output prices will ▼ the quantity of workers will remain fixed at the contracted level. The firm will respond to the unexpected increase in the price level by output it supplies. If many firms face similarly rigid wage contracts, the unexpected increase in the price level causes the quantity of output supplied the natural level of output in the short run. to Suppose…Explain the working of price mechanism in different economic
- Assume that the total productivity in our country decreases (a negative shock to the production function). a) Using a graph, What happens to the demand curve for labor? b) Using a graph, How would the decline in productivity affect the labor market (employment, unemployment and real wages), if labor market is always in equilibrium? c) Using a graph, How would decreases in productivity affect the labor market if unions prevented the decline in real wages?Statutory Minimum Wage (SMW) has come into force since 1 May 2011 in Hong Kong. The current SMW rate is $37.5 per hour. With the aid of a demand-and-supply diagram, illustrate the effect of aneconomic recession on a labour market with an effective minimum wage.a) Within the framework of the neoclassical theory, write down the optimization problem for a representative firm and show the profit-maximizing point graphically and discuss about it. b) Derive the rule of labor hiring for a firm that operates in the short-run.
- Suppose gold (G) and silver (S) are substitutes for each other because both serve as hedges against inflation. Suppose also that the supplies of both are fixed in the short run (QG=60 and QS=300) and that the demands for gold and silver are given by the following equations: PG= 960-QG+0.50PS PS= 600-QS+0.50PG a) What is the equilibrium prices ($) of gold and silver? b) What if a new discovery equilibrium of gold doubles the quantity supplied to 120? How will this discovery affect the prices of both gold and silver?Why should a business owner be concern with the inflation rate in the Dairy products industry, and how might it have an impact on the Dairy products industry?Assume that aggregate demand curve can be expressed by the following function: W = 55 - 3Q, while the aggregate supply curve can be expressed by the following function: W = 5+7Q. Here W denotes wage level in thousand dollar and Q denotes unit of labours in million people. What is labour equilibrium wage level and units of labour?
