Oregon’s 5.6 percent unemployment rate is close to the national average of 5.5 percent. A few years ago, Oregon had one of the highest unemployment rates in the nation. To avoid rising unemployment, Oregon Governor Kulongoski’s plan is to provide public schools and universities with enough state funds to meet growing demand for skilled workers. Also, Kulongoski wants to use government money for bridges, roads, and buildings to stimulate more construction jobs. a. What is the main type of unemployment that Governor Kulongoski is using policies to avoid? Explain. b. How might these policies impact Oregon’s natural unemployment rate? Explain.
> 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
> When real GDP increased in the second quarter of 2014, consumption expenditure, exports, and fixed investment increased, but business inventory investment fell from $14.5 billion to $7.0 billion. Explain how a fall in business inventories influences aggr
> If a euro deposit in a bank in France earns interest of 4 percent a year and a yen deposit in Japan earns 0.5 percent a year, other things remaining the same and adjusted for risk, what is the exchange rate expectation of the Japanese yen?
> The U.S. dollar exchange rate increased from $0.96 Canadian in June 2011 to $1.03 Canadian in June 2012, and it decreased from 81 Japanese yen in June 2011 to 78 yen in June 2012. What was the value of 100 yen in terms of U.S. dollars in June 2011 and Ju
> The U.S. dollar exchange rate increased from $0.96 Canadian in June 2011 to $1.03 Canadian in June 2012, and it decreased from 81 Japanese yen in June 2011 to 78 yen in June 2012. What was the value of the Canadian dollar in terms of U.S. dollars in June
> Answer the following questions. a. Describe the key differences in performance of the U.S. and Canadian job markets during 2008–2014. b. How do the part-time employment rates of the two countries compare? c. Why might the U.S. job market have been so muc
> The U.S. dollar exchange rate increased from $0.96 Canadian in June 2011 to $1.03 Canadian in June 2012, and it decreased from 81 Japanese yen in June 2011 to 78 yen in June 2012. Did the U.S. dollar appreciate or depreciate against the Canadian dollar?
> Is Canada a net borrower or a net lender? Is it a debtor or a creditor nation?
> What is a flexible exchange rate and how does it work?
> What makes an exchange rate hard to predict?
> What makes the Canadian dollar exchange rate fluctuate?
> How is the equilibrium exchange rate determined?
> What are the influences on the supply of Canadian dollars in the foreign exchange market?
> What are the influences on the demand for Canadian dollars in the foreign exchange market?
> The table gives some data about the U.K. economy: Item…………………………… Billions of U.K. pounds Consumption expenditure………………………..………. 721 Exports of goods and services…………………..……… 277 Government expenditures……………………….………. 230 Net taxes………………………………………………….……..
> The table gives some data about the U.K. economy: Item…………………………… Billions of U.K. pounds Consumption expenditure………………………..………. 721 Exports of goods and services…………………..……… 277 Government expenditures……………………….………. 230 Net taxes………………………………………………….……..
> Real consumption expenditure in 2002 chained dollars was $814.2 billion in 2009 and $841.5 billion in 2010. In current dollars, it was $898.2 billion in 2009 and $940.6 billion in 2011. a. Calculate the chained price index for consumption (CPIC) for 2009
> Suppose that the exchange rate rose from 80 yen per Canadian dollar to 90 yen per Canadian dollar. What is the effect of this change on the quantity of Canadian dollars that people plan to sell in the foreign exchange market?
> Suppose that the exchange rate fell from 80 yen per Canadian dollar to 70 yen per Canadian dollar. What is the effect of this change on the quantity of Canadian dollars that people plan to buy in the foreign exchange market?
> Suppose that yesterday the Canadian dollar was trading on the foreign exchange market at 0.75 euros per Canadian dollar and today the Canadian dollar is trading at 0.80 euros per Canadian dollar. Which of the two currencies (the Canadian dollar or the eu
> The People’s Bank of China announces it will cut the required reserve ratio. Explain how lowering the required reserve ratio will impact banks’ money creation process.
> Money in Canada today includes which of the following items? Cash in CIBC’s cash machines; Bank of Canada dollar bills in your wallet; your Visa card; your loan to pay for school fees.
> Does the quantity theory correctly predict the effects of money growth on inflation?
> What is the equation of exchange?
> How is the velocity of circulation calculated?
> What is the quantity theory of money?
> How is money market equilibrium determined in the short run?
> Amazon.com agreed to pay its workers $20 an hour in 1999 and $22 an hour in 2001. The price level for these years was 166 in 1999 and 180 in 2001. Calculate the real wage rate in each year. Did these workers really get a pay raise between 1999 and 2001?
> A bank manager tells you that she doesn’t create money. She just lends the money that people deposit. Explain why she’s wrong.
> What limits the quantity of money that the banking system can create?
> What are the Bank of Canada’s two main policy tools?
> What is the monetary base and how does it relate to the Bank of Canada’s balance sheet?
> What are the functions of depository institutions?
> What are depository institutions?
> What are the main components of money in Canada today?
> Explain the distinction between a central bank and a chartered bank.
> The RBC says lines of credit for education are popular and the size of loans to students has been going up as tuition costs have increased. Compared to “good debt” like a mortgage, student loan rates are higher because the debt is riskier. Financial inst
> The table sets out the data for an economy when the government’s budget is balanced. If the government’s budget becomes a deficit of $1 trillion and the Ricardo-Barro effect occurs, what are the real interest rate and
> A typical family on Sandy Island consumes only juice and cloth. Last year, which was the base year, the family spent $40 on juice and $25 on cloth. In the base year, juice was $4 a bottle and cloth was $5 a length. This year, juice is $4 a bottle and clo
> First Call, Inc., a smartphone company, plans to build an assembly plant that costs $10 million if the real interest rate is 6 percent a year or a larger plant that costs $12 million if the real interest rate is 5 percent a year or a smaller plant that c
> Michael is an Internet service provider. On December 31, 2014, he bought an existing business with servers and a building worth $400,000. During 2015, his business grew and he bought new servers for $500,000. The market value of some of his older servers
> The table sets out the data for an economy when the government’s budget is balanced. Suppose that the quantity of loanable funds demanded increases by $1 trillion at each real interest rate and the quantity of loanable funds supplied i
> Michael is an Internet service provider. On December 31, 2014, he bought an existing business with servers and a building worth $400,000. During 2015, his business grew and he bought new servers for $500,000. The market value of some of his older servers
> What is the crowding-out effect and how does it work?
> How does a government budget surplus or deficit influence the loanable funds market?
> Why is the real interest rate the opportunity cost of loanable funds?
> What is the loanable funds market?
> What are the three main types of markets for financial capital?
> What is the distinction between gross investment and net investment?
> The deficit in the first 10 months of the year from April 2013 to January 2014 totalled $10.54 billion, down from $13.87 billion in the same period a year earlier. a. Explain the effect of the decrease in the budget deficit on the loanable funds market.
> At the start of 2008, India had an annual growth of 9 percent, huge consumer demand, and increasing investment. But by July 2008, India had large government deficits and rising interest rates. Economic growth is expected to fall to 7 percent by the end o
> At the start of 2008, India had an annual growth of 9 percent, huge consumer demand, and increasing investment. But by July 2008, India had large government deficits and rising interest rates. Economic growth is expected to fall to 7 percent by the end o
> In 2012, the Lee family had disposable income of $80,000, wealth of $140,000, and an expected future income of $80,000 a year. At a real interest rate of 4 percent a year, the Lee family saves $15,000 a year; at a real interest rate of 6 percent a year,
> Karrie is a golf pro, and after she paid taxes, her income from golf and interest from financial assets was $1,500,000 in 2013. At the beginning of 2013, she owned $900,000 worth of financial assets. At the end of 2013, Karrie’s financial assets were wor
> Annie runs a fitness centre. On December 31, 2014, she bought an existing business with exercise equipment and a building worth $300,000. During 2015, business improved and she bought some new equipment for $50,000. At the end of 2015, her equipment and
> An economy’s capital stock was $46.3 billion at the end of 2010, $46.6 billion at the end of 2011, and $47.0 billion at the end of 2012. Depreciation in 2011 was $2.4 billion, and gross investment during 2012 was $2.8 billion (all in 2007 dollars). Calcu
> An economy’s capital stock was $46.3 billion at the end of 2010, $46.6 billion at the end of 2011, and $47.0 billion at the end of 2012. Depreciation in 2011 was $2.4 billion, and gross investment during 2012 was $2.8 billion (all in 2007 dollars). Calcu
> On January 1, 2014, Terry’s Towing Service owned 4 tow trucks valued at $300,000. During 2014, Terry’s bought 2 new trucks for a total of $180,000. At the end of 2014, the market value of all of the firm’s trucks was $400,000. What was Terry’s gross inve
> The tables describe an economy’s labour market and its production function in 2014. In 2015, the population increases and labour hours supplied increase by 10 at each real wage rate. Does the standard of living in this economy increase
> CNN reported that for the first six months of 2008, the U.S. economy lost 438,000 jobs. The job losses in June were concentrated in manufacturing and construction, two sectors that have been badly battered in the recession. a. Based on the report, what m
> The tables describe an economy’s labour market and its production function in 2014. In 2015, the population increases and labour hours supplied increase by 10 at each real wage rate. What are the equilibrium real wage rate, labour prod
> The tables describe an economy’s labour market and its production function in 2014. What are the equilibrium real wage rate, the quantity of labour employed in 2014, labour productivity, and potential GDP in 2014? Real wage rat dln
> The Asian Development Bank reported that Myanmar’s GDP growth accelerated to 7.5% in 2013 from 7.3% in 2012. Growth was supported by rising investment, improved business confidence, commodity exports, and buoyant tourism. Is this expansion more likely to
> What, according to neoclassical growth theory, is the fundamental cause of economic growth?
> What are the preconditions for labour productivity growth?
> What are the effects of an increase in labour productivity on potential GDP, the quantity of labour, the real wage rate, and potential GDP per hour of labour?
> 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
