Question

Suppose now producers (firms) receive news that future total factor productivity will be high . The...

Suppose now producers (firms) receive news that future total factor productivity

will be

high

. The monetary authority targets the interest rate to the long run

equilibrium le

vel, and uses money supply to keep the interest rate at the target.

What will happen to the labor employment, real wage, output, consumption,

investment, average labor productivity, and money supply? Explain the reasons of

the direction of change for each

of the variables, and when necessary, use graphs

to help your explanation.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume the economy is initially in equilibrium, and then firms expect future total factor productivity, z’,...
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: a) Output supply (increase / decrease / indeterminate / no change)? b) Output demand (increase / decrease / indeterminate / no change)? c) Labor supply (increase / decrease / indeterminate / no change)? d) Labor demand (increase / decrease / indeterminate / no change)? e) Money supply (increase /...
Compare the effects of a temporary and a permanent increase in total factor productivity on output,...
Compare the effects of a temporary and a permanent increase in total factor productivity on output, employment, real wage, real interest rate, consumption and investment.
Answer the following questions about the effects of total factor productivity shocks: 1. Imagine a decrease...
Answer the following questions about the effects of total factor productivity shocks: 1. Imagine a decrease in total factor productivity (z) happens. We want to explain the effects of this in the labor, asset, and money markets. Determine the effects this shock will have on output, investment, consumption, employment, real wage, real interest rates, average labor productivity, and the price level. 2. Do these movements in part 1 correspond to the actual movement of economic variables during business cycles? In...
33 In the future, total factor productivity will increase. The following statement is wrong () A...
33 In the future, total factor productivity will increase. The following statement is wrong () A Output demand curve shifts to the right B Labor supply curve shifts to the right C equilibrium wage drop D Labor demand moves right 34 Mobile payment technology makes people's money demand () A increases B decreases C unchanged D uncertain 35 If there is a systemic risk in the banking industry, the demand for money will be () A increases B decreases C...
Explain very briefly if the following statements are true or false. Mathematical or graphic treatment will...
Explain very briefly if the following statements are true or false. Mathematical or graphic treatment will be appreciated wherever possible or necessary. 5. In Keynes’ model the labor market clears at such a real wage rate at which both households and firms maximize their utility and profit respectively. 6. In the classical model, the quantity theory of money holds at all times postulating that real money balances are demanded in proportion to real income. Therefore, we can express this as...
42.   Macroeconomics deals mainly with: (a) the market behavior of individual industries and firms; (b) economics...
42.   Macroeconomics deals mainly with: (a) the market behavior of individual industries and firms; (b) economics from the perspective of an entire economy; (c) price theory; (d) none of the above. 43.   Over the last several decades, the share of national income accruing to labor has tended to: (a) trend downward relative to the share accruing to capital; (b) increase annually relative to capital’s share; (c) increase sharply despite periodic declines attributable to inflation; (d) remain constant. 44.   Fiscal policy...
The crowding out effect is zero if Select one: a. the LM-curve is vertical b. the...
The crowding out effect is zero if Select one: a. the LM-curve is vertical b. the central bank conducts open market sales following fiscal expansion c. income is stimulated via a tax cut rather than an increase in government spending d. the central bank conducts open market purchases following fiscal expansion e. the LM-curve is horizontal An asset (other than money) is considered to be more liquid if Select one: a. it can be quickly and cheaply transferred into money...
Q1 - The number of adults (people greater than or equal to 15 years of age)...
Q1 - The number of adults (people greater than or equal to 15 years of age) that are considered officially unemployed (by government-calculated statistics) is typically different from (and usually less than) the number of adults actually without a job. This situation may arise because: i) The labor force (as calculated by government statistics) is inclusive only of adults who are either employed or actively seeking employment. ii) Full-time students, homemakers, and retirees are not considered part of the labor...
THIS IS THE GENERAL EQUILIBRIUM PROBLEM THAT I PROMISED. YOU FIRST SOLVE FOR THE INITIAL EQUILIBRIUM...
THIS IS THE GENERAL EQUILIBRIUM PROBLEM THAT I PROMISED. YOU FIRST SOLVE FOR THE INITIAL EQUILIBRIUM AS POINT A. WE CONSIDER TWO DIFFERENT AND SEPARATE SHOCKS (I CALL THEM SCENARIOS). THE FIRST SHOCK IS TO THE IS CURVE, THE SECOND SHOCK IS A ‘LM’ SHOCK. AGAIN, WE CONSIDER THESE SHOCKS SEPARATELY SO THAT AFTER YOU COMPLETE SCENARIO 1 (THE IS SHOCK), WE GO BACK TO THE ORIGINAL CONDITIONS AND CONSIDER THE SECOND SCENARIO WHICH IS THE ‘LM’ SHOCK. Consider the...
2. This question refers to the article: Fed raises interest rates, signals 2 more hikes in...
2. This question refers to the article: Fed raises interest rates, signals 2 more hikes in 2018 Akin Oyedele Mar. 21, 2018, 2:00 PM 16,032     The Federal Reserve announced Wednesday that it raised its benchmark interest rate by 25 basis points, to a range of 1.50% to 1.75%.     Over the next few weeks, this increase will affect credit cards, adjustable-rate mortgages, car loans, and other credit lines that don't have fixed rates.     The Fed still expects to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT