A union negotiates a wage of 35 euros/hour in manufacturing…
A union negotiates a wage of 35 euros/hour in manufacturing where the competitive equilibrium is 25 euros/hour. Workers displaced from manufacturing move to retail, where the equilibrium was 18 euros/hour. What is the expected effect on retail wages?
Read DetailsCountry Alpha and Country Beta both start with GDP per capit…
Country Alpha and Country Beta both start with GDP per capita of $5,000. Alpha grows at 2% per year; Beta grows at 5% per year. Approximately how many years will it take for Beta’s GDP per capita to be AT LEAST DOUBLE Alpha’s?
Read DetailsA student proposes: (1) Lower the reserve ratio from 15% to…
A student proposes: (1) Lower the reserve ratio from 15% to 5%; (2) Print money to fund government infrastructure (roads); (3) Subsidize university education. Evaluate each component’s effect on LONG-RUN price level and LONG-RUN real GDP per capita.
Read DetailsIn 2021, the Fed expanded M2 by approximately 26%. Real GDP…
In 2021, the Fed expanded M2 by approximately 26%. Real GDP grew approximately 5.7%. Using pi = % change M – % change Y and assuming stable velocity, what inflation rate does the theory predict, and how does this compare to actual CPI inflation of 4.7% in 2021?
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