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Macroeconomics Quick Questions

Customer Question

Needed by 10pm today 2/15/09

1.In these question you will be given descriptions of people in various scenarios. Determine whether each individual is frictionally unemployed, structurally unemployed, or cyclically unemployed.

a.Kurt is an auto mechanic who lacks computer skills, and due to a recent surge of computerization in fixing and testing vehicles, Kurt is laid off from his company.

b.Sandeep is a business consultant for technology companies. Due to a recent recession in which a lot of technology companies went out of business, Sandeep is laid off.

c.Kara just graduated with a master's degree in economics. She's taking her time to find the best job that fits well with her background, interests, and living situation.

2.Although fluctuations in the unemployment rate are an ever-changing phenomenon, the natural rate of unemployment fluctuates much less than the actual unemployment rate. In fact, factors that affect the actual unemployment rate might not affect the natural rate.

a.Which of these would affect the actual unemployment rate?

I. Teenagers can enter the labor force at an earlier age.
II. The economy has been in an expansion for the last decade.
III. The government raises the minimum wage for manual laborers.
IV. Labor unions have become more demanding in terms of negotiating higher wages.

b.Which of the following would increase the natural rate of unemployment?
I. Teenagers can enter the labor force at an earlier age.
II. The economy has been in an expansion for the last decade.
III. The government raises the minimum wage for manual laborers.
IV. Labor unions have become more demanding in terms of negotiating higher wages.

3.Which of the following is synonymous with the natural rate of unemployment?
A. The non-accelerating inflation rate of unemployment
B. The average unemployment rate
C. Cyclical unemployment
D. The actual rate of unemployment

4.The United States witnessed an expansion almost a decade long during the 1990s, a period of significant economic growth with low unemployment.

a.What must have been true of the output gap when the U.S. economy was booming during the 1990s?
A. The output gap was negative.
B. The output gap was equal to zero.
C. The output gap was positive

b.Again consider the output gap in the United States during the expansion. Okun's Law predicts that _____.
A. The actual unemployment rate is above the natural rate
B. The actual unemployment rate is equal to the natural rate
C. The actual unemployment rate is below the natural rate

c.Again consider the output gap in the United States during the expansion.

Many economists estimate that the natural rate of unemployment is approximately 5%. (The average unemployment rate during the 1990s was estimated to be around 4%.) The short-run Phillips curve predicts that ____. (Hint: For simplicity, you can assume that the typical American expected no inflation during the expansion.)
A. The actual inflation rate is equal to the expected inflation rate
B. The actual inflation rate is less than the expected inflation rate
C. The actual inflation rate is greater than the expected inflation rate

5. As the United States began to recover from the 2001 recession, the job creation rate remained low, and the unemployment rate did not fall as much as economic theory would suggest.

Assuming that the natural rate of unemployment was relatively constant, which of the following statements helps explain how the unemployment rate could remain unchanged even as the economy expanded?

(Hint: Think about what Okun's Law predicts in terms of aggregate and potential output.)
A. Aggregate output was still declining.
B. Aggregate output was growing faster than potential output.
C. Aggregate output was growing at the same rate as potential output.
D. Aggregate output was not changing.

6. Suppose that worried about a recession, the government of the United States is thinking about increasing government spending on goods and services to stimulate the economy.

a.Which statement best identifies the view that classical macroeconomists have about expansionary fiscal policy?
A. Fiscal policy can increase aggregate output and decrease unemployment while lowering the aggregate price level.
B. Fiscal policy might be useful, but monetary policy should be considered first.
C. Fiscal policy is the best policy to bring the economy out of a recession.
D. Fiscal policy has no effect on aggregate output and unemployment in either the short run or long run.

b.What would Keynesian macroeconomists say about expansionary fiscal policy?
A. Fiscal policy can increase aggregate output and decrease unemployment while lowering the aggregate price level.
B. Fiscal policy has no effect on aggregate output and unemployment in the short run and long run.
C. Fiscal policy is the best policy to bring the economy out of a recession.
D. Fiscal policy might be useful, but monetary policy should be considered first.

c.What would monetarists say about expansionary fiscal policy?
A. Fiscal policy is the best policy to bring the economy out of a recession.
B. Fiscal policy can help, but most of the time it is counterproductive.
C. Fiscal policy can increase aggregate output and decrease unemployment while lowering the aggregate price level.
D. Fiscal policy might be useful, but discretionary monetary policy should be considered first.

d.What is the modern macroeconomic consensus on the use of expansionary fiscal policy?
A. Fiscal policy is the best policy to bring the economy out of a recession.
B. Fiscal policy has no effect on aggregate output and unemployment.
C. Fiscal policy can increase aggregate output and decrease unemployment while lowering the aggregate price level.
D. Fiscal policy might be useful, but monetary policy should be considered first.

7.In response to the U.S. recession of 2001, the Federal Reserve increased the money supply (M1) and drove down the Federal funds rate aggressively.

a.Which of the following statements about the impact of the Fed's increase in the money supply would monetarists agree with?

I. Discretionary monetary policy can have adverse effects.
II. Fiscal policy is the best policy to bring the economy out of a recession.
III. The economy will grow steadily if the Federal Reserve follows a monetary policy rule.
IV. Monetary policy should always be used with fiscal policy.

b.Which of the following statements regarding monetary policy is true according to the modern macroeconomic consensus?

I. Monetary policy should follow a monetary rule, as monetarists suggested.
II. Monetary policy should have the lead role in economic stabilization.
III. Monetary policy should reflect political interests.

c.Which of the following statements regarding fiscal policy is true according to the modern macroeconomic consensus?

I. Policy lags and the risks of a political business cycle have limited its effectiveness.
II. The central bank, not the government, should be in charge of government spending and taxes.
III. Fiscal policy should be the leading choice in economic stabilization only when monetary policy is not effective.
Submitted: 5 years ago.
Category: Homework
Expert:  KARRY replied 5 years ago.
hello wellcome to justanswer- your prescribed deadline time has passed, if you still need the solution for these question then let me know..i am not answering them at the moment as the deadline have passed.
Customer: replied 5 years ago.
Yes I still need the answers. Managed to get an extension.
Expert:  KARRY replied 5 years ago.

hello chuck, wellcome yo justanswer

 

here are your answers/ answers are in the bold letters.

1.In these question you will be given descriptions of people in various scenarios. Determine whether each individual is frictionally unemployed, structurally unemployed, or cyclically unemployed.

a.Kurt is an auto mechanic who lacks computer skills, and due to a recent surge of computerization in fixing and testing vehicles, Kurt is laid off from his company. - structurally unemployed

b.Sandeep is a business consultant for technology companies. Due to a recent recession in which a lot of technology companies went out of business, Sandeep is laid off. - cyclically unemployed.

c.Kara just graduated with a master's degree in economics. She's taking her time to find the best job that fits well with her background, interests, and living situation. - frictionally unemployed.

 

2.Although fluctuations in the unemployment rate are an ever-changing phenomenon, the natural rate of unemployment fluctuates much less than the actual unemployment rate. In fact, factors that affect the actual unemployment rate might not affect the natural rate.

a.Which of these would affect the actual unemployment rate?

III. The government raises the minimum wage for manual laborers.
IV. Labor unions have become more demanding in terms of negotiating higher wages.


b.Which of the following would increase the natural rate of unemployment?
I. Teenagers can enter the labor force at an earlier age.
II. The economy has been in an expansion for the last decade.

 

3.Which of the following is synonymous with the natural rate of unemployment?


A. The non-accelerating inflation rate of unemployment
B. The average unemployment rate.

4.The United States witnessed an expansion almost a decade long during the 1990s, a period of significant economic growth with low unemployment.

a.What must have been true of the output gap when the U.S. economy was booming during the 1990s?
A. The output gap was positive.

b.Again consider the output gap in the United States during the expansion. Okun's Law predicts that _____.
C. The actual unemployment rate is below the natural rate

 

 

5. As the United States began to recover from the 2001 recession, the job creation rate remained low, and the unemployment rate did not fall as much as economic theory would suggest.

Assuming that the natural rate of unemployment was relatively constant, which of the following statements helps explain how the unemployment rate could remain unchanged even as the economy expanded?

(Hint: Think about what Okun's Law predicts in terms of aggregate and potential output.)
B. Aggregate output was growing faster than potential output.

 

6. Suppose that worried about a recession, the government of the United States is thinking about increasing government spending on goods and services to stimulate the economy.

a.Which statement best identifies the view that classical macroeconomists have about expansionary fiscal policy?

D. Fiscal policy has no effect on aggregate output and unemployment in either the short run or long run.

b.What would Keynesian macroeconomists say about expansionary fiscal policy?


A. Fiscal policy can increase aggregate output and decrease unemployment while lowering the aggregate price level.

 

c.What would monetarists say about expansionary fiscal policy?

D. Fiscal policy might be useful, but discretionary monetary policy should be considered first.

d.What is the modern macroeconomic consensus on the use of expansionary fiscal policy?

C. Fiscal policy can increase aggregate output and decrease unemployment while lowering the aggregate price level.

 

7.In response to the U.S. recession of 2001, the Federal Reserve increased the money supply (M1) and drove down the Federal funds rate aggressively.

a.Which of the following statements about the impact of the Fed's increase in the money supply would monetarists agree with?

III. The economy will grow steadily if the Federal Reserve follows a monetary policy rule.

b.Which of the following statements regarding monetary policy is true according to the modern macroeconomic consensus?

I. Monetary policy should follow a monetary rule, as monetarists suggested.
II. Monetary policy should have the lead role in economic stabilization.


c.Which of the following statements regarding fiscal policy is true according to the modern macroeconomic consensus?


III. Fiscal policy should be the leading choice in economic stabilization only when monetary policy is not effective.

 

they were preety questions using modern & classical views of marcoeconomic policies.

please dont forget to press accept button & add for bonuses. thanx a lot.

 

 

 

Expert:  KARRY replied 5 years ago.

one correction in question 3rd only answer

B. The average unemployment rate. is correct. not A.

Customer: replied 5 years ago.
Sorry, I was just going over the exact numbers. Your hard work netted a total of only 4 correct answers. Also you correction was incorrect, A. was the correct answer. I'm not going to accept because of this but, as I see you have have 100% positive feedback I won't leave negative feedback. I must say I am very disappointed though.
Expert:  KARRY replied 5 years ago.
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