1. Based on price setting behavior, we know that a reduction in the unemployment rate will...
1. Based on price setting behavior, we know that a reduction in the unemployment rate will cause
no change in the real wage.
a reduction in the real wage.
an upward shift of the PS curve.
an increase in the real wage.
Homework Answers
Reduction in the unemployment rate will cause "an upward shift of the PS curve"
Lower unemployment (less individuals are available for work) leads to increase in wage pressure as businesses pay higher wages to attract individuals for work.
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1. Based on price setting behavior, we know
that a reduction in the unemployment rate will...
Using the WS-PS model, graphically explain the effects of a reduction in the markup on the...
Using the WS-PS model, graphically explain the effects of a reduction in the markup on the equilibrium real wage, the natural rate of unemployment, the natural level of employment, and the natural level of output. Answer: A reduction in the markup will cause firms to [Select] the price given the nominal wage This will cause the real wage based on the price setting behavior to [Select] ; this is represented by a(n) [Select] shift in the [Select] curve. As a...
7. Explain what effect a reduction in productivity has on wage setting behavior, price setting behavior,...
7. Explain what effect a reduction in productivity has on wage setting behavior, price setting behavior, the equilibrium real wage, the natural rate of unemployment, and the natural level of output. 8. When (exact time and date) is the final for this class? Where will it be held?
anc dns 9. Suppose the actual unemployment rate increases. This will cause C ) a. a...
anc dns 9. Suppose the actual unemployment rate increases. This will cause C ) a. a downward shift in the WS curve. ( ) b. a downward shift in the PS curve. ( c. an upward shift in the WS curves ( ) d. a movement along the PS curve. 10. Suppose that increased international trade makes product markets more competitive in the U.S. Given this information, we would expect to observe which of the following? ( a. an upward...
3. Use the Wage-Setting (WS) and Price-Setting (PS) relations to examine the effects of the following...
3. Use the Wage-Setting (WS) and Price-Setting (PS) relations to examine the effects of the following events on the natural rate of unemployment, real wage, level of employment, and output. a. reduction in employment insurance. b. less stringent competition law. c. increase in the minimum wage.
Suppose that the markup of goods prices over marginal cost is 5%, and the wage-setting equation is W = P(1-u), where u is the unemployment rate. The real wage, as determined by the price-setting equation is _______. The natural rate of unemployment is ___
Suppose that the markup of goods prices over marginal cost is 5%, and the wage-setting equation isW = P(1-u)where u is the unemployment rate.The real wage, as determined by the price-setting equation is _______.The natural rate of unemployment is _______%.
According to the wage-setting relation, a decrease in the unemployment rate ___ the worker's bargaining power and consequently ___ the real wage.
According to the wage-setting relation, a decrease in the unemployment rate ___ the worker's bargaining power and consequently ___ the real wage. In the figure on the right, demonstrate the wage-setting relation graphically.) Using the 3-point curved line tool, draw the wage-setting relation. Label your curve 'WS'.Carefully follow the instructions above and only draw the required object.Now suppose that the unemployment benefits become less generous. In this case, the wage-setting relation shown in the graph will shift ___.
Explain what effect an increase in the unemployment rate will have on the real wage based...
Explain what effect an increase in the unemployment rate will have on the real wage based on: (1) the WS relation; and (2) the PS relation. [Note that you are not being asked to discuss the impact on equilibrium real wage. Instead, you should explain what each of the two relations says about the impact of unemployment on real wage individually].
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1+mW where m is...
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1+mW where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2. Draw the...
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1 + m)W where...
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1 + m)W where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2....
Question 1: (a) The Wage Setting Relation is given by: WS: W-1"F(u, z) Explain the effect of an increase in the unemployment rate, u, on nominal wage, W. Be sure to explain both intuitively using...
Question 1: (a) The Wage Setting Relation is given by: WS: W-1"F(u, z) Explain the effect of an increase in the unemployment rate, u, on nominal wage, W. Be sure to explain both intuitively using words and using the above equation. (b) The Price Setting Relation is given by: PS: P (1 m)W Explain the relationship between monopoly power and the markup, m. (c) Re-arrange PS and show that an increase in the markup leads to a decrease in the...
Using the WS-PS model, graphically explain the effects of a reduction in the markup on the equilibrium real wage, the natural rate of unemployment, the natural level of employment, and the natural level of output. Answer: A reduction in the markup will cause firms to [Select] the price given the nominal wage This will cause the real wage based on the price setting behavior to [Select] ; this is represented by a(n) [Select] shift in the [Select] curve. As a...
7. Explain what effect a reduction in productivity has on wage setting behavior, price setting behavior, the equilibrium real wage, the natural rate of unemployment, and the natural level of output. 8. When (exact time and date) is the final for this class? Where will it be held?
anc dns 9. Suppose the actual unemployment rate increases. This will cause C ) a. a downward shift in the WS curve. ( ) b. a downward shift in the PS curve. ( c. an upward shift in the WS curves ( ) d. a movement along the PS curve. 10. Suppose that increased international trade makes product markets more competitive in the U.S. Given this information, we would expect to observe which of the following? ( a. an upward...
Explain what effect an increase in the unemployment rate will have on the real wage based on: (1) the WS relation; and (2) the PS relation. [Note that you are not being asked to discuss the impact on equilibrium real wage. Instead, you should explain what each of the two relations says about the impact of unemployment on real wage individually].
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1+mW where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2. Draw the...
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1 + m)W where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2....
Question 1: (a) The Wage Setting Relation is given by: WS: W-1"F(u, z) Explain the effect of an increase in the unemployment rate, u, on nominal wage, W. Be sure to explain both intuitively using words and using the above equation. (b) The Price Setting Relation is given by: PS: P (1 m)W Explain the relationship between monopoly power and the markup, m. (c) Re-arrange PS and show that an increase in the markup leads to a decrease in the...
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