Based on our understanding of the labor market model presented in Chapter 6, we know that a reduction in the markup will cause A) an increase in the equilibrium real wage. B) a reduction in the equilibrium real wage. C) an increase in the natural rate of unemployment. D) a reduction in the natural rate of unemployment and no change in the real wage.
Q: Full employment unemployment rate" (also called the natural rate of unemployment) is defined as…
A: Unemployment refers to a state of joblessness during which an individual who is eligible, willing,…
Q: The natural level of employment (N) will increase when a. an increase in the markup of prices over…
A: Option D All of the above. It is the unemployment rate which occurs from economic forces. A rise…
Q: Firms will hire more workers as long as the marginal product of labor is positive. the marginal…
A: The rule which firms follow to hire more worker: P * MPL = W Labor participation rate is the ratio…
Q: Which of the following statements is correct regarding the model of the labour market? A)…
A: When talking about labor market, it is the place for workers and employers who interact with each…
Q: Which of the following statements is FALSE? (A) high rates of unemployment often have a way of…
A: Statement B is false. The availability of unemployment benefits reduces the worker's effort to find…
Q: In the United States over the last 50 years, O A. the labor force participation rate for women has…
A: In the past 50 years, there has been a tremendous growth in terms of upgradation of technology.
Q: The bathtub model of unemployment revisited - Lt is the labor force, Ut is the number of unemployed…
A: The labour force is defined as that part of the population which is actively searching for work. It…
Q: Year 2017 2018 2019 Unemployment Rate 11.63% 9.1% 8.0% Inflation Rate 4.39% 3.73% 3.91%…
A: Answer: Given data; Year 2017 2018 2019 Unemployment rate 11.63% 9.1% 8.0% Inflation rate…
Q: Suppose a govemment report about a country's employment situation reveals the following data (all…
A: Unemployment is the level where person want to work and have skill but dont have work and labor…
Q: Reducing the natural rate of unemployment requires reducing the rate of job separation and…
A: Natural rate of unemployment is the unemployment rate that persist in a healthy and growing economy…
Q: How will each of the following affect the current level of full employment output? Explain a) A…
A: Full employment:- When an economy is at full employment, its GDP is at its maximum equilibrium…
Q: The production function is assumed to be Y=N. Let z represent all other factors that affect the wage…
A: Mark-up: It refers to the situation where selling price is more than the cost of the product. When…
Q: Which of the following statements is false a. Natural rate of unemployment includes frictional and…
A: Here all the statements are regarding unemployment Definition of unemployment : Unemployment is a…
Q: Suppose the labour market is initially in equilibrium. Now consider that the government raises…
A: In this question the labour supply is that people want to provide to the firm and the labour demand…
Q: The table below shows unemployment and labor force statistics for an economy. Actual rate of…
A: Part (d) Cyclical unemployment is type of unemployment that is related to the cyclical trends in…
Q: Which of the following statements is FALSE? high rates of unemployment often have a way of…
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: If, over two periods (quarters), the unemployment rate had reduced from 6.5 to 5.5 per cent and the…
A: Unemployment: It includes all those individuals who are willing and able to work at the prevailing…
Q: Labor Market Flows. Suppose that the law of motion for unemployment is given by 4,+1 - u, = s(1 –…
A: Law of motion of unemployment is given by the equation : u(t+1) - u(t) = s(1-ut) - fu(t) s : is the…
Q: Determine how the following affect the slope of the output supply curve and explain your results.…
A: In economics, inter-temporal substitution effect explains the impact of changes in the expected…
Q: Suppose that there is technological change that reduces the cost of recruiting for firms. Using the…
A: A Search and Unemployment Model with Two Sides. It involves both the supply (workers) and demand…
Q: The table below shows unemployment and labor force statistics for an economy. Actual rate of…
A: a. Labor force is the total number of people employed or people who are looking for jobs. It does…
Q: Anna recently graduated from college with a degree in electrical engineering, but she has not yet…
A: If someone does not look for work for any amount of time,then that person would be counted as…
Q: The table below shows unemployment and labor force statistics for an economy. Actual rate of…
A: Hello. Since you have posted multiple parts of the question and not specified which part of the…
Q: Show and explain the existence of involuntary unemployment in the labor market by using the…
A: The Efficiency Wage Theory postulates that firms can increase productivity by increasing wages. This…
Q: Which of the following statements is correct? A) To increase its profit, the firm always increases…
A: Firms must establish wages sufficiently high to ensure that employees receive an employment rent in…
Q: When unemployment exists in the supply and demand labor market model, there is an adjustment that…
A: Unemployment is the situation where the workers who are willing to and able to work but unable to…
Q: Consider a diagram in which employment is measured in the horizontal axis, and real wage is measured…
A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
Q: Under what assumptions is the aggregate labour demand function to be represented as a…
A: The quantity of labor available to be offered at a certain pay rate is referred to as labor supply.
Q: Between 2008 and 2009, total Canadian employment increased by 277,000 workers, but the number of…
A: The labour force is the sum of the number of people employed and the number of people unemployed. It…
Q: Population Employed Structurally Unemployed Frictionally Unemployed Cyclically Unemployed 1,500,000…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: according to bathtub labour market model unemployment rate is 12% separation rate is 1.5% and job…
A: The given information: Unemployment rate is 12%Seperation rate (s) is 1.5%Job findinng rate (f) is…
Q: Suppose that the rate of job separation is 5% and the job-finding rate is 40%. The natural rate of…
A: Disclaimer: Since you have asked a multipart question, we will solve the first three questions for…
Q: The sticky-wage theory suggests an unexpectedly high price level lowers _____ causing firms to hire…
A: Introduction In sticky wage theory, nominal wages are sticky in the short run. When there is…
Q: Consider the Labor Market Graph above. This graph shows the labor market conditions in a…
A: Hi! Thanks for the question but as per the guidelines, we answer up to 3 parts at one time. Kindly…
Q: In each case classify the individual as either employed, unemployed, or not in the labor force. 1.…
A: Unemployment is a term referring to individuals who are employable and actively seeking a job but…
Q: A decrease in the level of output will cause the following events on the labour market: Select one:…
A: The study of labor economics attempts to comprehend the operation and dynamics of wage labor…
Q: While unemployment is highly negatively correlated with the level of economic activity, in the real…
A: Unemployment is the situation in which the individuals are ready to do work but they are unable to…
Q: Identify the following variables as procyclical, countercyclical, or acyclical: (1) consumption, (2)…
A: Procyclical variables fluctuate positively in correlation with business cycle fluctuations in the…
Q: Question 26 "Based on the wage-setting equation, we know that an increase in the unemployment rate…
A: When talking about wage-setting curve, it can be said that it is an upward sloping curve to show the…
Q: Structural unemployment a. arises from mismatches between available jobs and workers' skills or…
A: Structural unemployment occurs when people lack the basic skills needed to do the job or live far…
Q: The real business cycle theory believes the supply of labour is inelastic True False
A: Supply is considered inelastic in real business cycle theory.
Q: A key difference between the original Keynesian and New Keynesian approaches to the labour market ,…
A: The Keynesian model would be the earlier model in which Keynesian attempts to explain the aggregate…
Q: The labour market in an economy is characterised by the following equations: Wage setting: =…
A: Wage determination in the labour market is characterized by the WS equation. There is a negative…
Based on our understanding of the labor market model presented in Chapter 6, we know that a reduction in the markup will cause
A) an increase in the equilibrium real wage.
B) a reduction in the equilibrium real wage.
C) an increase in the natural rate of
D) a reduction in the natural rate of unemployment and no change in the real wage.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 4) An increase in the minimum wage will cause: A) a reduction in the equilibrium real wage. B) an increase in the natural rate of unemployment. C) an increase in the equilibrium real wage. D) a decrease in the natural rate of unemployment. E) no change in the natural rate of unemployment.The labour market in an economy is characterised by the following equations: W = 0.7-0.9u ре Wage setting: W = 0.5 P Price setting: In which W is nominal wages, pe and P are expected nominal prices and nominal prices, respectively, u is level of unemployment. Consider a linear production function for firms such that Q = N, i.e., production for firms (Q) depends only on the number of employees (N). Considering this information, which of the following statements are CORRECT: U The price mark-up (u) for this economy is 1 (i.e. µ = 1). O If actual output is below potential output, actual unemployment rate is below 0.22, (i.e. uț < 0.22). The equilibrium unemployment in this economy is 0.22 (i.e. ue = 0.22). U If wage setters become less responsive to changes in unemployment (e.g., from -0.9 to -0.7), the equilibrium unemployment decreases.The rate of job separations in the economy is 0.013 (1.3 percent) and rate of job finding is 0.25 (25 percent). a) If the economy has 500 workers in the labor force, calculate the unemployment rate and the number of unemployed in the steady state. b) If the rate of job separations is 1 percent, what happens to the unemployment rate and the number of unemployed in the steady state? c) If labor force suddenly increases by 20 workers who are seeking work (and the rate of job separations remains at 1 percent), what is the immediate change in the unemployment rate? What is the new steady-state unemployment rate? Draw a graph on how unemployment rate evolves in time.
- Consider an economy in which the marginal product of labour is given by MPN = A(150 − N), where N is the amount of labor used. The amount of labour supplied is given by 60 + 5(1 − t)w, where w is the real wage and t is the tax rate on labour income. (a) Suppose A = 2 and t = 20%. Calculate the equilibrium levels of real wage and employment. (b) Suppose that the economy experiences an adverse supply shock and A = 1. Everything else remains the same as before. Calculate the equilibrium levels of real wage and employment in this case. (c) Suppose that the government lowers the labour income tax by 50% following the adverse supply shock, i.e., A = 1 and t = 10%. Calculate the equilibrium levels of real wage and employment in this case. (d) Use the labour market diagram to illustrate the adjustments from the original equilibrium in part (a) to the equilibrium in part (b) and then the adjustments from the equilibrium in part (b) to the equilibrium in part (c). Explain the adjustments from…In which of the following cases will we observe unemployment? the quantity of labor demanded is greater than the quantity of labor supplied at the going wage rate. the wage is below the level that balances supply and demand for labor. there is a shortage of workers. the quantity of labor demanded is less than the quantity of labor supplied at the going wage rate.Total labour supply is fixed at 100. Output is produced using only labour and the labour demand curve in the urban area is LDu=100-4w and in the rural area is: LDr=100-4w. There is a minimum wage of 14 in the urban area, but the wage is set competitively in the rural area. We assume that there is no unemployment in this model. Labour markets are competitive. (a) What is the wage and level of employment in the urban and rural sector? b) If the minimum wage was abolished, what would be the total gain/loss to (1) workers that were in the urban area before the change, (2) workers that were in the rural area before the change (c) What would be the total change in output if the minimum wage was abolished.
- The labour market in an economy is characterised by the following equations: Wage setting: Price setting: W p² W Р = 0.9-0.5u = 1 1+µ -A In which W is nominal wages, pe and P are expected nominal prices and nominal prices, respectively, u is level of unemployment. µ is the price mark-up and λ is the marginal product of labour. Assume μ = 0.3 and λ = 1.1 Considering this information, which of the following statements are CORRECT: Improvement in working conditions will have no effects in the equilibrium level of unemployment in this economy. If this economy's actual output is below its potential output, there is pressure for real wages to decrease below 0.85 (i.e., W<0.85). If price marginal product of labour decreases to 1, the equilibrium real wage in this economy will decrease. A positive demand shock will change the equilibrium variables in this economy.Suppose that a country experiences a reduction in productivity – that is, an adverse shock to the production function.A) What happens to the labor demand curve? Show the change on the graph.B) How would this change in productivity affect the unemployment rate if the labor market is always in equilibrium?Explain your answer referring to the graph.If the rate of separation is 10% and the rate of finding a job is 20%, then the equilibrium unemployment rate is a) 33.33% b) 50.00% c)) 66.67% d) 100.00% 2) When there is an increase in the rate of unionization in an economy, then a) frictional unemployment increases. b) the natural rate of unemployment increases. c) both a) and b) are correct. d) neither a) nor b) are correct. 3) If the Philips curve is ?? = ????- 3(?? - ?? ??) + ?? and there are no supply shocks. If monetary policy's target is 6%, the natural rate of unemployment is 6%, and inflation has been 9%, what does the unemployment rate have to be to achieve their target? a) 3% b) 6% c) 7% d) 9% 4) If the sacrifice ratio is estimated to be 3, then to reduce inflation by 3 percentage points, would require a) a total output increase of 1% v. b) a total output increase of 9%. c) a total output decrease of 1%. d) a total output decrease of 9%. 5) Which of the following would be an explanation for a hysteresis effect that…
- Which of the following statements is correct regarding the model of the labour market? A) Labour-saving technological progress raises unemployment in both the short and long run. B) In the long-run model, the markup is independent of the number of firms. C) In the long-run model, firms enter the market when the markup is low. D) In the short- and medium-run models the amount of capital is fixed, while in the long-run model the amount of capital can vary.Assume that a labor market can be described by the functions Ld 100 – 2w and Ls = 10 + 3w. Then assume the government imposes a $20 minimum wage, calculate: it may be helpful) i. amount of unemployment created and the amount of actual job loss as a result of the minimum wage. ii. the unemployment rate in society. (No graph is needed, butSuppose that the condition in part (a) holds and wages adjust to equilibrate labor supply and labor demand. Calculate the wage and employment in each sector. What is the a) Equilibrium wage? b) Emplyment in the Manufacturing sector c) Employment in the Service Sector?