(a) Suppose the natural rate of unemployment for the economy is 5 percent and the economy is currently experiencing an 8 percent unemployment rate. Explain what will likely happen to wages and prices as the economy adjusts to the long-run equilibrium. (b) Using the information below, explain the adjustments that will be taken by firms and workers to move the economy to a long-run equilibrium, specifically in terms of costs of production, real and nominal wages, and prices of products. Assume that firms and workers have adaptive expectations. The current unemployment rate = 4%. The natural rate of unemployment = 5%. Last year's inflation rate = 2%. This year's inflation rate = 3%. (c) The workers in the oil and gas industry in Alberta are paid an average of $68.50 per hour, and through their collective bargaining agreement, they have incorporated a 3.5 percent annual raise in their contracts to account for anticipated inflation. Suppose there is unexpected inflation of 2.8% percent instead. Explain how this will affect the real wages of these workers and the unemployment rate of these workers.

Graphically show the impact of a positive technological shock. Include all three markets: Labor, Product, Capital. Start with an initial steady state. Show the impact of a shock in the initial market. Next show the propagation mechanism--how it carries over into the other two markets. Show at least one set of the feedback loop, Show the new steady state.

In order to mitigate the economic impacts of the COVID-19 recession, the Government plans to run large budget deficits to improve infrastructure and build more public and transitional houses in New Zealand.   Briefly describe the impact of this budget plan (with everything else held constant) on the following variables in the short run.  (a) aggregate demand; (b) the price level; (c) the supply of loanable funds; (d) the real interest rate; (e) the relative attractiveness of NZD-denominated assets; (f) net foreign investment; (g) the exchange rate of the NZ dollar; (h) NZ exports (i) NZ imports; (j) the value of NZ net exports.

The graphs below depict the initial market for labor (on the left) and the macroeconomic production function (on the right). You will use these graphs to identify the effect of an increase in the number of available workers on employment, Potential GDP, and per-worker productivity. Suppose that a substantial increase in labor force participation increases the supply of labor by 40,000 workers at every value of the real wage. (1) Identify the effect of this event on equilibrium employment in the market for labor, and identify the specific new equilibrium level of employment. (2) Identify the effect of this event on Potential GDP, and identify the specific new level of Potential GDP. (3) Finally, identify the effect of this event on per-worker productivity, and identify the specific new level of per-worker productivity. You should embed a graph that clearly depicts (1) the correct supply shift in the market for labor, (2) the new equilibrium real wage, and (3) the new equilibrium…

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?

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In the United States economy, there is a great deal of focus on technological advancements. These advances are said to increase worker productivity (like Zoom) or increase the productivity of capital (such as technology that makes the supply chain more efficient).What effect does advancement in technology have on the equilibrium real rental price and capital, assuming that the supply of capital is fixed? Explain, using the terms in the production function, how you know this to be true.

Which of the following is INCORRECT? In a typical month more than 5 percent of workers leave their jobs. Frictional unemployment is inevitable in a dynamic economy. Although the unemployment created by sectoral shifts is unfortunate, in the long run such changes lead to higher productivity and higher living standards. At least 10 percent of U.S. manufacturing jobs are destroyed every year.

The Greek letter a represents a number that determines how much output responds to unexpected changes in the price level. In this case, assume that a = $2 billion. That is, when the actual price level exceeds the expected price level by 1, the quantity of output supplied will exceed the natural level of output by $2 billion. Suppose the natural level of output is $50 billion of real GDP and that people expect a price level of 110. On the following graph, use the purple line (diamond symbol) to plot this economy's long-run aggregate supply (LRAS) curve. Then use the orange line segments (square symbol) to plot the economy's short-run aggregate supply (AS) curve at each of the following price levels: 100, 105, 110, 115, and 120. PRICE LEVEL 125 120 115 110 105 100 95 90 85 80 75 0 10 20 ☐ 30 40 50 60 70 OUTPUT (Billions of dollars) 80 90 100 -0- AS LRAS (?) The short-run quantity of output supplied by firms will fall short of the natural level of output when the actual price level level…

Suppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will    . The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will    . The temporary unemployment resulting from such sectoral shifts in the economy is best described as    unemployment.