Question

3.Colleges in Washington state offer many programs in information technology and computer science. Productivity of workers...

3.Colleges in Washington state offer many programs in information technology and computer science. Productivity of workers increases dramatically

(a)Draw a graph to show how the increase in labor productivity will affect the loanable funds market.

b)Would GDP increase or decrease?

4.Can real interest rate be higher than nominal interest rate? Explain.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

3) a) Increase in labor productivity will increase demand for labor. Firms are likely to use more labor and less capital. This implies that the demand for capital will decrease and the investment should decrease. Hence the demand for funds decreases in the loanable funds market. This reduces the rate of interest

b) Effect on GDP is ambiguous. Decrease in investment would shift AD left but higher production should shift AS right. GDP can increase because higher productivity will raise income of workers and this might raise consumption

4) Real interest rate = nominal interest rate - expected inflation. If expected inflation is greater than nominal interest rate then real interest can be higher than nominal interest rate

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
Colleges in Washington state offer many programs in information technology and computer science. Productivity of workers...
Colleges in Washington state offer many programs in information technology and computer science. Productivity of workers increases dramatically. Draw a graph to show how the increase in labor productivity will affect the loanable funds market. Would GDP increase or decrease? Can real interest rate be higher than nominal interest rate? Explain.
1. A higher savings rate that leads to an increase in the capital stock leads to...
1. A higher savings rate that leads to an increase in the capital stock leads to increases in labor productivity. is associated with a decrease in the rate of growth of the population. immediately decreases investment. leads to higher interest rates. 2. Factors that influence labor productivity include ________. physical capital, human capital, and technology the inflation rate, the real wage rate, and the exchange rate physical capital, the real wage rate, and technology the labor demand curve 3. The...
Mutiple Choice: 1-3. A competitive firm hires labor until the marginal product of labor equals the:...
Mutiple Choice: 1-3. A competitive firm hires labor until the marginal product of labor equals the: A. real wage. B. rental price of capital. C. price of output. D. capital/labor ratio 2-3. According to the model developed in Chapter 3, when government spending increases but taxes are not raised, interest rates: A. increase. B. are unchanged. C. decrease. D. can vary. 3-3. . In a closed economy with a fixed total income, a reduction in taxes will cause consumption: A....
1. For each of the following events, determine whether the aggregate demand curve or the short-run...
1. For each of the following events, determine whether the aggregate demand curve or the short-run aggregate supply curve will shift. Show the shift on a graph and explain what happens to equilibrium price level and equilibrium GDP because of the shift. A.) A stock market boom makes people wealthier. B.) A recession overseas causes foreigners to buy fewer US goods. C.) Oil prices rise. D.) The government implements several new programs thereby increasing its spending. E.) A technological improvement...
The data in this table are for Wisconsin in August 2020. Use the data to answer...
The data in this table are for Wisconsin in August 2020. Use the data to answer the next two questions. Population 4,661,000 Labor force participation rate 65% Unemployment rate 6.2% Question 6 (3 points) Using the data from the preceding table, determine the number of people in Wisconsin's labor force in August 2020. You do not need to show your work. Your answer: Question 7 (3 points) Using the data from the preceding table, determine the number of unemployed workers...
Outright purchases by the Fed take place typically whenever: (a) a change in the Treasury bill...
Outright purchases by the Fed take place typically whenever: (a) a change in the Treasury bill target rate must be enforced; (b) the dollar is too weak relative to other major currencies (such as yen and euro); (c) a permanent injection of reserves is needed; (d) repo transactions by the desk at the New York Fed must be offset. A short-hand measure of real, sustainable economic growth includes which of the following: (a) growth in productivity plus growth in the...
1. Which of the following is true of unemployment? A) It is defined as the number...
1. Which of the following is true of unemployment? A) It is defined as the number of people actively looking for work who do not have jobs. B) The result is that the economy operates inside its production possibilities curve. C) There are psychological consequences associated with unemployment. D) All of the above. 2. Which of the following people would be considered unemployed? A) Homer, who lost his job at the power plant and is not looking for work B)...
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...
Principles of Macroeconomics Q.1 In the short run, firms expand their production when the price level...
Principles of Macroeconomics Q.1 In the short run, firms expand their production when the price level rises because A.the higher prices allow the firm to hire more workers by offering higher wages, thereby increasing productivity and profits. B. each firm must keep its production up to the level of its rivals, and some firms will expand production as the price level increases. C.firms can increase their profits by increasing their maintenance. D.the money wage rate remains constant so the higher...
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity....
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity. B) the aggregate unemployment rate. C) the aggregate quantity of output demanded by households, businesses, the government, and the rest of the world. D) the aggregate quantity of output demanded by businesses only. 2.When the aggregate price level increases, the purchasing power of many assets falls, causing a decrease in consumer spending. This is known as the _____ effect and is a reason why...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT