We can combine the models we have seen so far to explain both real GDP and the price level in the long run. Real GDP is determined according to the production model, which is summarized in Table 4.1 of your textbook where the aggregate production function is Cobb-Douglas with labor share equal to 2/3. The price level is obtained from the quantity theory, which is summarized in Table 8.3 of your textbook. The nominal wage (in dollars) is the product of the real wage and the price level. (i) Express the equilibrium real wage as a function of the capital stock, labor force, and TFP Express the equilibrium nominal wage as a function of the money supply, velocity of money, and labor force. (ii) Suppose TFP increases. What happens to the real and nominal wages? (iii) Suppose the money supply increases. What happens to the real and nominal wages? Your answers must be detailed and you must provide the different steps leading to your

We can combine the models we have seen so far to explain both real GDP and the price level in the long run. Real GDP is determined according to the production model, which is summarized in Table 4.1 of your textbook where the aggregate production function is Cobb-Douglas with labor share equal to 2/3. The price level is obtained from the quantity theory, which is summarized in Table 8.3 of your textbook. The nominal wage (in dollars) is the product of the real wage and the price level. (i) Express the equilibrium real wage as a function of the capital stock, labor force, and TFP Express the equilibrium nominal wage as a function of the money supply, velocity of money, and labor force. (ii) Suppose TFP increases. What happens to the real and nominal wages? (iii) Suppose the money supply increases. What happens to the real and nominal wages? Your answers must be detailed and you must provide the different steps leading to your

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter6: How Statisticians Measure Inflation

Section6.A: How Statisticians Measure Inflation

Problem 6TY

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1. Key facts about economic fluctuations The graph included below approximates United States business cycles between quarter one of 1947 and quarter three of 1951. The shaded region denotes periods of six or more consecutive months of declining real gross domestic product (real GDP). W 1048 1040 1000 YEAR REAL GDP (Billions of dollars) 2170 2070 1970 1870 1770 1047 1001 Source: "Current-dollar and Real GOR" Bureau of Economics Analysis. last modified May 1, 13. accessed May 15. 13. http://www.bea.gov/national/xl/gdplev.. Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run fluctuations in real GDP are often referred to as
Suppose the economy is self-regulating, the price level is 132, the quantity demanded of RealGDP is 4 trillion, the quantity supplied of Real GDP in the short run is 3.9 trillion, and thequantity supplied of Real GDP in the long run is 4.3 trillion. Is the economy in short-runequilibrium? Will the price level in long-run equilibrium be greater than, less than, or equal to132? Show the relevant graph and explain your answers.
The table describes an economy's labor market. What are the equilibrium quantity of labor employed and the equilibrium real wage rate? The equilibrium quantity of labor employed is enter your response here hours and the equilibrium real wage rate is $ enter your response here an hour.
What is the quantity of real GDP produced if the real wage rate is at the full-employment equilibrium level? If the real wage rate is at the full-employment equilibrium level, real GDP is _______. A. at its highest attainable and efficient level B. equal to potential GDP, which is the most that can be produced C. at or below potential GDP depending on the level of employment D. equal to potential GDP, which is efficient but is not the most that can be produced
/118790/quizzes/952344/take ASU My ASU Р P1 PO P PO P1 OB ASU CANVAS O C A LRAS YO Y1 B LRAS YO Y1 SAS AD Real GDP SAS AD' SAS AD Real GDP P PO P1 P P1 PO C LRAS Y1 YO D AD' LRAS SAS Y1 YO SAS AD Real GDP SAS AD Suppose the economy begins in long-run equilibrium. Which of the graphs best describes the long-run result of a decrease in the money supply? Real GDP P P1 PO PO P1 E ……….. LRAS www. F YO YO LRAS SAS' AD' SAS AD SAS AD Real GDP AD' SAS' Real GDP
Cosider the following data on U.S GDP:a.What was the growth rate of nominal GDP between 1994 to 2014?b.What was the growth rate of the GDPdeflator between 1994 to 2014?c.What was the real GDP in 1994 measured in 2009 prices?d.What was the real GDP in 2014measured in 2009 prices?e.What was the growth rate of the GDP between 1994 to 2014?f.Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP?Explain.
Identify the effect on GDP due to the following factors. Factors Effect on GDP An improvement in transportation facilities. A decreased investment in infrastructure. An increase in brain drain in a nation. Increase in GDP Decrease in GDP The use of advanced technology Which of the following statements regarding the aggregate production function is true? O A. GDP increases at a decreasing rate for every unit increase in the efficiency units of labor B. GDP increases at an increasing rate for every unit increase in the physical capital stock C. GDP increases by a constant amount for every unit increase in the physical capital stock. O D. GDP decreases by a constant amount for every unit increase in the efficiency units of labor. O O
Which event does not affect the long-run level of real GDP ? O The available knowledge and skills in the economy increases. O A severe hurricane destroyed factories. O The country experiences widesprcad technological advancements. O Firms and workers expect the price level to rise.
The table below shows the total expenditure on a basket of goods and services. Use this information to calculate index numbers for the cost of a basket of goods and services in each period. Assume Period 3 is the base year. Round to one decimal place. Provide your answer below: Period 1 Period 2 Period 3 Period 4 Total Expenditure $3, 100 $3,350 $3,400 $3,450 Period 1 Period 2= Period 3 Period 4 Index Number
The table below shows the total expenditure on a basket of goods and services. Use this information to calculate index numbers for the cost of a basket of goods and services in each period. Assume Period 1 is the base year. Round to one decimal place. Provide your answer below: Period 1 Period 2 Period 3 Period 4 Total Expenditure $1,100 $1,350 $1,400 $1,450 Period 1 Period 2-Period 3 = Period 4 = | Index Number
Suppose the economy of Hawkland is initially at full employment. Currently real GDP is $20 trillion, theprice level is 120, the money wage is $36/hour, the full employment quantity of labor is 300 billionhours per year, and the current unemployment rate is 6%. Draw a fully labeled graph depicting the aggregate goods and services market in Hawkland.Be sure to label all axes and include numerical values for variables on the axes where relevant. Providea brief explanation to the side and show any necessary calculations. Label any relevant curves with azero (0, for example: AD0) and use a zero in a circle to clearly label the initial equilibrium
Consider the information in the following table for the first two years of the Great Depression (the values for real GDP and potential GDP are in 2012 dollars) Potential Real GDP $1.056.6 billion $1,148.9 billion OA. potential GDP increased. OB. the price level decreased. Year 1929 1930 Sources: U.S. Bureau of Labor Statistics; and U.S. Bureau of Economic Analysis. a. The information in the table is different from what we would expect to have happened in a recession in the past 50 years because OC. actual real GDP decreased OD. the unemployment rate increased Actual Real GDP $1,109.4 billion $1,015.1 billion Price Level 9.4 9.1