The equilibrium effects of a prospective future increase in total factor productivity include
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Ans is A
The increase in total factor productivity will increase the real wage and an increase in real interest rate. Both capital and labor return will increase because of an improvement in technology
The equilibrium effects of a prospective future increase in total factor productivity include Question 1 options:...
2. Assume the economy is initially in equilibrium, and then firms expect future total factor productivity, z', to decrease. Using the New Keynesian Model framework, what are the implications on the following outcomes. For the money market, use the framework with interest rates on the vertical axis. f) Wages (increase / decrease / indeterminate / no change)? g) Money supply increase / decrease / indeterminate / no change)? h) Money demand increase / decrease / indeterminate / no change)? i)...
The supply of loanable funds (the source of funds) consists of Question 1 options: a) Total domestic saving and net foreign saving. b) Investment and net exports. c) Total domestic saving and investment. d) Only total domestic saving. Question 2 (1 point) Saved Assuming all else held constant, an increase in net exports will lead to Question 2 options: a) an increase in net foreign saving. b) a decrease in the source of funds. c) a decrease in the trade...
In the one-period model in Chapter 5, an increase in total factor productivity reduces consumption, increases output, and increases the real wage. increases consumption, increases output, and increases the real wage. reduces consumption, reduces output, and reduces the real wage. reduces consumption, increases output and reduces the real wage.
An increase in total factor productivity causes the Question 9 options: 1) production function to shift up, labour demand to shift right, and output supply to shift right. 2) production function to shift up, labour demand to shift left, and output supply to shift right. 3) production function to shift up, labour demand to shift right, and output supply to shift left. 4) production function to shift down, labour demand to shift left, and output supply to shift left. 5)...
An expected future increase in total factor productivity does NOT affect: current output demand. current investment demand. current labor demand. current wages.
Exhibit 8-2 Given Change in Economic Factor Real GDP Price Level Increase in foreign real national income (1) (2) Decrease in wage rates (3) (4) Beneficial supply shock (5) (6) Decrease in government purchases (7) (8) Increase in personal income taxes (9) (10) Decrease in labor productivity (11) (12) Refer to Exhibit 8-2. Based on the given change, what word (rises or falls) should go in blank (11) and blank (12), respectively, to summarize the resulting impact on short run equilibrium?...
Suppose there is a permanent increase in total factor productivity. Show what will happen to wages and the equilibrium quantity of labor using a graph of the labor market. Explain. Why is your answer different from problem number (3)?
7. (Figure 13.1) There is a decrease in total factor productivity. Which graph best illustrates this change? Wage Wage 100 45 40 35 70 20 15 10 20 10 MRP-D MRP 1 2 3 456 789 10 Quantity of labor 12 3 456 789 10 Quantity of labor Wage 50 45 Wage 35 35 15 10 15 10 MRP- 0 2 3 456789 1o Quantity 12 3 4 5 67 89 10 Quantity of labor of labor O (a) O...
1. (Specific Factor Model, Chapter 3) In the "simple" version of the specific factor model, there are two sectors (goods), one factor (labor) that is perfectly mobile between the two sectors, and one fixed - or specific - factor in each sector. To be concrete, suppose the two goods are food and clothing, the specific factor in food is "land" - represented by "T", and the specific factor in clothing is "capital", represented by "K'. The production functions for each...
2. Use the IS-LM model to analyze the general equilib- rium effects of a permanent increase in the price of oil (a permanent adverse supply shock) on current out- put, employment, the real wage, national saving, con- sumption, investment, the real interest rate, and the price level. Assume that, besides reducing the current productivity of capital and labor, the permanent sup- ply shock lowers both the expected future MPK and households' expected future incomes. (Assume that the rightward shift in...