Question

5-7

QUESTION 5 I nominal GDP grew 9 percent last year and the population have not changed and inflation rate was 4 percent, then real GDP per capita grew by percent. 2.25 13 QUESTION 6 -20 + 4/w), where w is the wage per Suppose a firm's labor demand equation is L-28-21w), and the labor supply equation that it froos is, hour worked. The government imposes a minimum wage equal to 10. As a result unemployment will not change increase by 12 Increase by 8. decrease by 8. decrease by 12. QUESTION 7 Which of the following would contribute to a sustained long-run economic growth Increase in average years of schooling in the country increase in marginal propensity to consume an influx of immigrant labor into an economy a shift of workers in the economy from the agricultural sector to the nonagricultural sector

Answer 1

Q5) OPTION 2) 5%

Growth rate of real per capita GDP

= NOMINAL GDP GROWTH RATE - POPULATION GROWTH- INFLATION

= 9-0-4

= 5%

6) OPTION 2)

At eqm, Ld = Ls

28-2w = -20+4w

48 = 6w, w* = 8, L* = 28-16 = 12

with Minimum wage :

w = 10, Ld = 28-2*10 = 8

Ls = -20+ 4*10 = 20

As Ls > Ld, so unemployment will rise

Unemployment = Ls - Ld = 12 ,

So u rises by 12

7) option A)

Increase in human capital leads to sustained long run Economic growth