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Economics 2302 Assignments 9 and 10

Economics 2302 Assignments 9 and 10. Tony Lima This is version 1.1. I have corrected the answer to chapter 13, question 17. Chapter 13, Question 1a. When the AS curve is flat, the economy is in a recession. Answer A is the only answer that describes a recession. Chapter 13, Question 1b.

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Economics 2302 Assignments 9 and 10

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  1. Economics 2302Assignments 9 and 10 Tony LimaThis is version 1.1. I have corrected the answer to chapter 13, question 17.

  2. Chapter 13, Question 1a When the AS curve is flat, the economy is in a recession. Answer A is the only answer that describes a recession.

  3. Chapter 13, Question 1b When the AS curve is steep, the economy is nearing full employment GDP. Answer B is the only answer that describes an economy that is close to overheating..

  4. Chapter 13, Question 1c As an economy moves from left to right along the AS curve, output increases. Eventually the price level begins to increase too. The only answer that reflects this is A.

  5. Chapter 13, Question 4

  6. Chapter 13, Question 4 answer

  7. Chapter 13, Question 5

  8. Chapter 13, Question 5 answer The only possible answer is a large increase in immigration

  9. Chapter 13, Question 6

  10. Chapter 13, Question 6 answer

  11. Chapter 13, Question 6 answer • The price level will rise for sure. • However, output may rise or fall depending on whether AD or AS shifts more.

  12. Chapter 13, Question 9 When AD, AS, and LAS intersect at the same point, that is full employment GDP.That means Y0 is potential GDP.

  13. Chapter 13, Question 9 answer

  14. Chapter 13, Question 10 Y1 is above potential GDP (Y0).

  15. Chapter 13, Question 10 answer

  16. Chapter 13, Question 17 As I noticed in class today, the question specifically says the Fed is committed to an inflation target. Given that assumption, the only possible correct answer is A. But see the following explanation since in reality the Fed is not committed to an inflation target. In reality, the Fed may choose to increase the interest rate to fight inflation (extinguishing policy). Or they may choose to lower the interest rate to fight unemployment (accommodating policy). But, in the short run, the Fed has to make this difficult decision.

  17. Chapter 14, Question 1

  18. Chapter 14, Question 1 answer

  19. Chapter 14, Question 2

  20. Chapter 14, Question 2 answer

  21. Chapter 14, Question 3

  22. Chapter 14, Question 3 answer

  23. Chapter 14, Question 7a

  24. Chapter 14, Question 7a answer

  25. Chapter 14, Question 7b

  26. Chapter 14, Question 7b answer

  27. Chapter 14, Question 7b answer

  28. Chapter 14, Question 7c Answer: B. Labor markets generally adjust slowly to any change.

  29. Chapter 14, Question 10 This is a definition. Paying workers more than the equilibrium wage is a result of the efficiency wage theory.

  30. Chapter 14, Question 11a

  31. Chapter 14, Q. 11a answer

  32. Chapter 14, Question 11b

  33. Chapter 14, Question 11b

  34. Chapter 14, Q. 11b answer

  35. Chapter 14, Question 11c

  36. Chapter 14, Question 11c

  37. Chapter 14, Q. 11c answer At a wage of $12, labor supply will be 60 million and labor demand will be 40 million. Unemployment will be 60 – 40 = 20 million.

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