Suppose US real wages are higher than real wages in Europe in 2021. The Ricardian model predicts that the US real wage in the future _________.
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Suppose US real wages are higher than real wages in Europe in 2021.
The Ricardian model predicts that the US real wage in the future _________.
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- Countries like China and other developed economies are in the Neo dasmcal zone. What is the best option for these countries to sustain ther economies? a Increase aggregate supply b. Move back to Keynesian Zone c Move back to intermediate zone d. Decrease aggregate demand[Diagram required] An economy is in long run equilibrium with AD = 700 – 0.25p and ASO 0.25p - w + 500. The wage rate is w = 500. Now AS = 0.75p – w + 500. Be prepared to upload an AD/AS/LAS diagram showing all short-run and long-run equilibria: A, C, D. In the long run, D, the new wage will be equal to: |In the Keynesian model in the short run (IS-LM Framework), what is likely to happen to employment after each of the following shocks, based on the effective labor demand curve? How about an increase in the money supply?
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- Suppose GDP inflation (measured by the GDP Implicit Price Deflator) is 3.2% and the growth rate of real GDP is 2%. Moreover, assume that 1/V = 5.1%. How much revenue, as a share of GDP, would the inflation tax raise under these assumptions.Consider an economy (call it country G) that is implementing climate change legislation more rapidly than other countries (refer to them as ‘row’ for ‘rest of the world’). Explain how this decision by country G could affect its long-run markup. Using diagrams, explain your forecast for the effect of this decision on real wages, inequality and employment in G in the new equilibrium. In the light of your findings, what advice would you give to a policy maker in G?A boom is expected to be short-lived . The most sensible response is usually to: O Reduce the key interest rate O Increase taxes O Do nothing O Increase public consumption
- Attached: figure 1: Hayek’s (Classical) AD-AS Model Question 1 Why does Hayek’s aggregate supply curve always lead to an equilibrium level of national output equal to the full-employment level of real GDP? Question 2 Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Question 3 Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?Suppose the economy is self-regulating and the (actual) unemployment rate is less than the natural unemployment rate. This means that the economy is producing a level of output a. above its naturel level and will eventually cut back on output b. below its natural level and will eventually increase output c. below its natural level but no forces exist to automatically increase output d. above its natural level and institutional constraints will automatically be reduced so as to allow the economy to continue producing this level e. none of the aboveConsider a one-sided search model of unemployment we developed in class. In class discussion we never mentioned how unemployment insurance benefit, b, is financed. For this question, you are going to incorporate it to the model. Let's assume that in order to finance the unemployment insurance benefit, b, the government imposes lump-sum tax, T, on each employed worker. Assuming that the economy is in a long-run steady-state equilibrium, the total amount that needs to be paid out to unemployed workers is bU, where as usual, U repre- sents the fraction of unemployed. The total amount of tax collected (which we can interpret as an unemployment insurance premium) from employed workers is (1U)T. The government runs balanced budget, hence, bU = (1 – U)T. In this new setting, please show the effect of an increase in unemployment in- surance benefits, b, on reservation wage, w*, and on the long-run unemployment rate, U. Using graphs clearly demonstrate how the behavior of this model is…
