Matching people with available jobs is always difficult after a recession as the economy remakes itself. But labour market data suggest the disconnect is particularly acute this time. Since the recovery began, the number of job openings has risen twice as fast as actual hires. If the job market were working normally, openings would be filled as they appear. Some 5 million more would be employed and the unemployment rate would be 6.8%, instead of 9.5%. Are the 5 million workers who cannot find jobs because of mismatching in the labour market counted as part of the economy’s structural unemployment or part of its cyclical unemployment?
> According to former Federal Reserve chairman Alan Greenspan, IT investments in the 1990s boosted productivity, which boosted corporate profits, which led to more IT investments, and so on, leading to a nirvana of high growth. Which of the growth theories
> The first table describes an economy’s labour market in 2014 and the second table describes its production function in 2014. What are labour productivity and potential GDP in 2014? Red wage rate Labour haurn Idlan par hour Labour h
> The first table describes an economy’s labour market in 2014 and the second table describes its production function in 2014. What are the equilibrium real wage rate and the quantity of labour employed in 2014? Red wage rate Labour
> If a large increase in investment increases labour productivity, explain what happens to: a. Potential GDP. b. Employment. c. The real wage rate.
> Economic Conditions at the Cycle Bottom Employment rebounded by 0.1 percent in August 2008, its first gain in four months. All of the increase was in full-time jobs. The unemployment rate in August 2008 was unchanged at 6.1 percent. Compare the unemploym
> Economic Conditions at the Cycle Bottom Employment rebounded by 0.1 percent in August 2008, its first gain in four months. All of the increase was in full-time jobs. The unemployment rate in August 2008 was unchanged at 6.1 percent. How did the unemploym
> The IMF World Economic Outlook reports the following unemployment rates: Do these numbers tell us anything about the relative size of their labour force participation rates and employment-to-population ratios? Ragion Linited States 2010 2011 9.6 9.0
> The IMF World Economic Outlook reports the following unemployment rates: What do these numbers tell us about the relative size of their natural unemployment rates? Ragion Linited States 2010 2011 9.6 9.0 Euro area 10.1 10.9 Japan 5.1 4.5
> The IMF World Economic Outlook reports the following unemployment rates: What do these numbers tell us about the phase of the business cycle in the three regions in 2011? Ragion Linited States 2010 2011 9.6 9.0 Euro area 10.1 10.9 Japan 5.1 4.5
> With about 1.3 million Canadians looking for work, some employers are swamped with job applicants, but many employers can’t hire enough workers. The job market has changed. During the recession, millions of middle-skill, middlewage jobs disappeared. Now
> A high unemployment rate tells us that a large percentage of the labour force is unemployed but not why the unemployment rate is high. What unemployment measure tells us if (i) people are searching longer than usual to find a job, (ii) more people are
> If a severe drought decreases labour productivity, explain what happens to: a. Potential GDP. b. Employment. c. The real wage rate.
> Jobs Report: Hiring Up, Unemployment Down The Labor Department reported that hiring accelerated in November, and the unemployment rate fell to 8.6 percent from 9 percent in October. Two reasons for the fall are that more Americans got jobs, but even more
> What are the effects of an increase in the population on potential GDP, the quantity of labour, the real wage rate, and potential GDP per hour of labour?
> What are the two broad sources of potential GDP growth?
> Economic Conditions at the Cycle Bottom Employment rebounded by 0.1 percent in August 2008, its first gain in four months. All of the increase was in full-time jobs. The unemployment rate in August 2008 was unchanged at 6.1 percent. How can the unemploym
> What determines potential GDP?
> What is the aggregate production function?
> What is economic growth and how do we calculate its rate?
> In July 2011, the Canadian unemployment rate was 7.2 percent. In January 2012, the unemployment rate was 7.6 percent. Predict what happened to: The labour force between July 2011 and January 2012, if unemployment was constant.
> How does the unemployment rate fluctuate over the business cycle?
> What is the output gap? How does it change when the economy goes into recession?
> In July 2011, the Canadian unemployment rate was 7.2 percent. In January 2012, the unemployment rate was 7.6 percent. Predict what happened to: Unemployment between July 2011 and January 2012 if the labour force was constant.
> How do we calculate the inflation rate and what is its relationship with the CPI?
> What is the natural unemployment rate?
> What is the CPI and how is it calculated?
> The people on Coral Island buy only juice and cloth. The CPI basket contains the quantities bought in 2013. The average household spent $60 on juice and $30 on cloth in 2013 when juice was $2 a bottle and cloth was $5 a metre. In 2014, juice is $4 a bott
> What is the price level?
> Use the data in the Worked Problem on p. 673 . Calculate the change in equilibrium expenditure when investment decreases by $50 billion. Worked Problem on p. 673: You are given the following data about an economy that has a fixed price level, no imports
> Suppose that the economy is at full employment, the price level is 100, and the multiplier is 2. Investment increases by $100 billion. a. Compare the change in real GDP in the long run with the increase in investment. b. Explain how the price level chang
> Suppose that the economy is at full employment, the price level is 100, and the multiplier is 2. Investment increases by $100 billion. a. What is the immediate change in the quantity of real GDP demanded? b. In the short run, does real GDP increase by mo
> Suppose that the economy is at full employment, the price level is 100, and the multiplier is 2. Investment increases by $100 billion. What is the change in equilibrium expenditure if the price level remains at 100?
> Explain the link between equilibrium expenditure and the quantity of real GDP demanded.
> An economy has a fixed price level, no imports, and no income taxes. An increase in autonomous expenditure of $200 billion increases equilibrium expenditure by $800 billion. Calculate the multiplier and explain what happens to the multiplier if an income
> An economy has a fixed price level, no imports, and no income taxes. MPC is 0.80, and real GDP is $150 billion. Businesses increase investment by $5 billion. Calculate the new real GDP and explain why real GDP increases by more than $5 billion.
> Explain why induced consumption expenditure differs from autonomous consumption expenditure. Why isn’t all consumption expenditure induced expenditure?
> The figure illustrates the components of aggregate planned expenditure on Turtle Island. Turtle Island has no imports or exports, no incomes taxes, and the price level is fixed. a. What is aggregate planned expenditure when real GDP is $6 billion? b. If
> The people on Coral Island buy only juice and cloth. The CPI basket contains the quantities bought in 2013. The average household spent $60 on juice and $30 on cloth in 2013 when juice was $2 a bottle and cloth was $5 a metre. In 2014, juice is $4 a bott
> Describe the trends and fluctuations in the Canadian unemployment rate since 1960.
> The figure illustrates the components of aggregate planned expenditure on Turtle Island. Turtle Island has no imports or exports, no incomes taxes, and the price level is fixed. Calculate autonomous expenditure and the marginal propensity to consume.
> In an economy, when income increases from $400 billion to $500 billion, consumption expenditure increases from $420 billion to $500 billion. Calculate the marginal propensity to consume, the change in saving, and the marginal propensity to save.
> In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. The marginal propensity to consume is 0.7 and net taxes are $250 billion. Exports are $500 billion and imports are $
> In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. The marginal propensity to consume is 0.7 and net taxes are $250 billion. Exports are $500 billion and imports are $
> How does real GDP change in the long run when autonomous expenditure increases? Does real GDP change by the same amount as the change in aggregate demand? Why or why not?
> If autonomous expenditure increases with no change in the price level, what happens to the AE curve and the AD curve? Which curve shifts by an amount that is determined by the multiplier and why?
> How do fluctuations in autonomous expenditure influence real GDP?
> What is the multiplier? What does it determine? Why does it matter?
> How does equilibrium expenditure come about? What adjusts to achieve equilibrium?
> How do we calculate the effects of real GDP on consumption expenditure and imports by using the marginal propensity to consume and the marginal propensity to import?
> Define and explain how we calculate the marginal propensity to consume and the marginal propensity to save.
> In an economy with a fixed price level, autonomous spending is $20 billion and the slope of the AE curve is 0.6. a. What is the equation of the AE curve? b. Calculate equilibrium expenditure. c. Calculate the multiplier. d. Calculate the shift of the agg
> Answer the following questions. a. If the second quarter 2014 change in inventories was a planned change, what role did it play in shifting the AE curve and changing equilibrium expenditure? Use a two-part figure as shown below to answer this question.
> In Japan, consumer prices slid at a faster pace in July and industrial production unexpectedly slumped. Contrast what the news clip says is happening in Japan with what is happening in Canada in Problem 30 and provide a graphical analysis of the differen
> Consumer sentiment was up in August, helped by merchant discounts, especially from auto dealerships who received incentives from automakers Honda, General Motors, and Toyota to lower prices. But consumers are worried about the future. They are worried ab
> Consumer sentiment was up in August, helped by merchant discounts, especially from auto dealerships who received incentives from automakers Honda, General Motors, and Toyota to lower prices. But consumers are worried about the future. They are worried ab
> Consumer sentiment was up in August, helped by merchant discounts, especially from auto dealerships who received incentives from automakers Honda, General Motors, and Toyota to lower prices. But consumers are worried about the future. They are worried ab
> Compare the multiplier in the short run and the long run and explain why they are not identical.
> Statistics Canada reported that in the second quarter of 2014 Canadian exports increased by $24 billion. Explain and draw a graph to illustrate the effect of an increase in exports on equilibrium real GDP in the long run.
> President Obama’s proposal to jolt a listless economic recovery with $180 billion worth of tax breaks and transportation projects left economists largely unimpressed Tuesday. If taxes fall by $90 billion and the spending on transport projects increases b
> Matching people with available jobs is always difficult after a recession as the economy remakes itself. But labour market data suggest the disconnect is particularly acute this time. Since the recovery began, the number of job openings has risen twice a
> On January 27, 2009, the government announced a stimulus package, which included $12 billion earmarked for infrastructure—the construction of roads, bridges, public transit, broadband Internet access, schools, and social housing in every region of the co
> The spreadsheet lists real GDP ( Y ) and the components of aggregate planned expenditure in billions of dollars. a. What is aggregate planned expenditure when real GDP is $200 billion? b. If real GDP is $200 billion, explain the process that moves the ec
> The spreadsheet lists real GDP ( Y ) and the components of aggregate planned expenditure in billions of dollars. Calculate autonomous expenditure. Calculate the marginal propensity to consume. E M 2 A 100 110 50 60 60 15 3 200 170 50 60 60 30 300 230
> Gains in stock markets and increased house prices boosted Canadians’ wealth in the first quarter of 2014. On a per capita basis, household wealth rose to $222,600. Statistics Canada also reported that consumption expenditure increased by $4 billion in th
> You are given the following information about the economy of Australia: Disposable income………………………………….. Saving (billions of dollars per year) 0………………………………………………………………………….. 0 100……………………………………………………………………… 25 200……………………………………………………………………… 50 300………………
> You are given the following information about the economy of Australia: Disposable income………………………………….. Saving (billions of dollars per year) 0………………………………………………………………………….. 0 100……………………………………………………………………… 25 200……………………………………………………………………… 50 300………………
> Describe the policy change that a classical macroeconomist, a Keynesian, and a monetarist would recommend for Canadian policymakers to adopt in response to each of the following events: a. Growth in the world economy slows. b. The world price of oil rise
> Initially, the short-run aggregate supply curve is SAS0 and the aggregate demand curve is AD0. Some events change aggregate supply from SAS0 to SAS1 . Describe two events that could have created this change in aggregate supply. What is the equilibrium a
> Initially, the short-run aggregate supply curve is SAS0 and the aggregate demand curve is AD0. Some events change aggregate demand from AD0 to AD1. Describe two events that could have created this change in aggregate demand. What is the equilibrium afte
> Canada trades with the United States. Explain the effect of each of the following events on Canada’s aggregate demand. ■ The government of Canada cuts income taxes. ■ The United States experiences strong economic growth. ■ Canada sets new environmental s
> An exodus of discouraged searchers from the job market kept the unemployment rate from climbing above 10 percent. Had the labour force not decreased by 661,000, the unemployment rate would have been 10.4 percent. The number of discouraged searchers rose
> Labour productivity is rising at a rapid rate in China and wages are rising at a similar rate. Explain how a rise in labour productivity and wages in China will influence the quantity of real GDP supplied and aggregate supply in China.
> Explain the influence of each of the following events on the quantity of real GDP supplied and aggregate supply in India and use a graph to illustrate. ■ Canadian firms move their call handling, IT, and data functions to India. ■ Fuel prices rise. ■ Walm
> What are the defining features of monetarist macroeconomics and what policies do monetarist macroeconomists recommend?
> What are the defining features of Keynesian macroeconomics and what policies do Keynesian macroeconomists recommend?
> How do fluctuations in aggregate demand and short-run aggregate supply bring fluctuations in real GDP around potential GDP?
> Describe three types of short-run macroeconomic equilibrium.
> How do changes in expectations, fiscal policy and monetary policy, and the world economy change aggregate demand and the aggregate demand curve?
> Why does the aggregate demand curve slope downward?
> What does the aggregate demand curve show? What factors change and what factors remain the same when there is a movement along the aggregate demand curve?
> A decade ago, Brazil had rapid growth but now its economy is experiencing a slowdown with investment falling and inventories increasing. Potential GDP growth rate has slowed. Business and consumer confidence has fallen. a. Explain the effect of a decreas
> In July 2014, in the economy of Sandy Island, 10,000 people were employed, 1,000 were unemployed, and 5,000 were not in the labour force. During August 2014, 80 people lost their jobs and didn’t look for new ones, 20 people quit their jobs and retired, 1
> Answer the following questions. a. What are the main features of the Canadian economy in the second quarter of 2014? b. Did Canada have a recessionary gap or an inflationary gap in 2014? How do you know? c. Use the AS - AD model to show the changes in ag
> Cut Taxes and Boost Spending? Raise Taxes and Cut Spending? Cut Taxes and Cut Spending? This headline expresses three views about what to do to get an economy growing more rapidly and contribute to closing the recessionary gap. Economists from which macr
> Greg Mankiw wrote in 2007 on the eve of the global financial crisis, “Congress made its most important contribution to taming the business cycle back in 1913, when it created the Federal Reserve System. Today, the Fed remains the first line of defence ag
> Explain why changes in consumer spending and business investment play a large role in the business cycle.
> The magazine Women of China reported that the percentage of income spent on consumer goods by urban Chinese women increased from 26 percent in 2007 to 63 percent in 2009. China’s National Bureau of Statistics reported that in the first six months of 2010
> The magazine Women of China reported that the percentage of income spent on consumer goods by urban Chinese women increased from 26 percent in 2007 to 63 percent in 2009. China’s National Bureau of Statistics reported that in the first six months of 2010
> The following events have occurred at times in the history of Canada: ■ The world economy goes into an expansion. ■ Canadian businesses expect future profits to rise. ■ The government increases its expenditure on goods and services in a time of increased
> Real exports of goods and services increased 4.2 percent in the second quarter, after falling 0.2 percent in the first quarter. Real imports of goods and services increased 2.7 percent, after falling 1.4 percent in the first quarter. Explain how the chan
> Explain for each event whether it changes the quantity of real GDP demanded or aggregate demand in Canada. ■ Canada’s exports to the European Union boom. ■ Canadian firms build new pipelines across the nation. ■ Foreign exchange dealers expect the Canadi
> Explain for each event whether it changes the quantity of real GDP supplied, short-run aggregate supply, long-run aggregate supply, or a combination of them. ■ Automotive firms in Canada switch to a new technology that raises productivity. ■ Toyota and H
> In Canada between June and July in 2014, the number of full-time jobs fell by 59,700 while part-time jobs increased by 60,000. The unemployment rate fell 0.1 percent to 7 percent as some workers left the job market. The participation rate fell to 65.9 pe
> The table gives some information about Canada’s international transactions in 2010. Item……………………………………………………. Billions ofdollars Imports of goods and services……………….………….…….…… 508 Net foreign investment in Canada………….………….……..……. 54 Exports of goods and
> With the strengthening of the yen against other currencies in 2012, Japan’s central bank did not take any action. A Japanese politician called on the central bank to take actions to weaken the yen, saying it will help exporters in the short run and have
> The Canadian price level is 106.3, the Japanese price level is 95.4, and the real exchange rate is 103.6 Japanese real GDP per unit of Canadian real GDP. What is the nominal exchange rate?
> The U.K. pound is trading at 1.54 Canadian dollars per U.K. pound and purchasing power parity holds. The Canadian interest rate is 2 percent a year and the U.K. interest rate is 4 percent a year. a. Calculate the Canadian interest rate differential. b. W
> Colombia is the world’s biggest producer of roses. The global demand for roses increases and at the same time Colombia’s central bank increases the interest rate. In the foreign exchange market for Colombian pesos, what happens to: a. The demand for peso
> On March 30, 2012, the U.S. dollar was trading at 82 yen per U.S. dollar on the foreign exchange market. On August 30, 2012, the U.S. dollar was trading at 79 yen per U.S. dollar. a. What events in the foreign exchange market could have brought this fall
> How are net exports and the government sector balance linked?
