An Introduction to Macroeconomics

Homework 1 Problem 1 Q Use the impart and demand framework in the lug securities industry to explain why employment has grown rapidly in the unify States in recent decades while at the same time at that place has been a slowdown in real(a)- pursue growth. A With the growth of both supply and demand in the US, we can see that the quantity of jade call for has change magnitude. In the same time the wages have not increased that much, because if we have an increase in both supply and demand we forget have a shift to the right of the equilibrium, which basically shows an increase in quantity of mash exactly not wages paid.Problem 2 Q In a small town of 100 pile, there are 10 children under 16, 10 retired people, 60 people with full-time jobs, 3 people with part-time jobs, 3 full-time students over 16, and 4 full-time homemakers. The be people did not have jobs, but wanted jobs. All but one of these had actively looked for a job in the previous quadruple weeks. What is the unemployment rate in this town? Show your work.A 100 (total number of people) 10 (children under 16) 10 (retired) 4 (homemakers who are not part of the motor bosom) 3 (fulltime students) 1 (not searching for job) = 72 people labor force 72 (labor force) 60 (full time jobs) 3 (part-time jobs) = 9 (unemployed but seek jobs) Employment rate = employed/labor force = (labor force unemployed)/ labor force = 63/72 = 0. 875 = 87. 5% Unemployment rate = unemployed/labor force = 9/72 = 0. 125 = 12. 5% Problem 3 Q High Tech, Inc. produces plastic chairs that sell for $12 each. The following table provides entropy about how numerous plastic chairs can be produced per hour.Assume that apart from labor there are additional issue cost of $2 per chair. How many workers will be hired if the hourly wage for workers is $70? A of Workers Chairs Produced Income Prod. Cost Wage Net Income 1 10 120 20 70 30 2 18 216 36 140 40 3 24 288 48 210 30 4 28 336 56 280 0 5 30 360 60 350 -50 There wi ll be hired only 2 workers, because after one hour of production and paying for the work, with 2 workers the company will have the highest net income mates to $40. Problem 4 Q A report indicated that the average real wage in manufacturing declined by 2% between 1990 and 2000.If the cost-of-living index equaled 1. 30 in 1990, 1. 69 in 2000, and the average nominal wage in manufacturing was $35 in 2000, what was the average nominal wage in manufacturing in 1990? A Year CPI Nominal Salary Real Salary 1990 1. 30 $x $(y+2%) 2000 1. 69 $35 $y Y=35/1. 69=20. 71 (Real Salary for 2000) Y+2%= 20. 71 + 20. 71*0. 02=21. 1242 (Real Salary for 1990) X= 21. 1242*1. 30=27. 4614 (Nominal Salary for 1990) Problem 5 Q A labor contract provides for a first-year wage of $10 per hour, and specifies that the real wage will rise by 3 part in the uphold year of the contract and by another 3 percent in the third year.The CPI is 1. 00 in the first year, 1. 07 in the second year, and 1. 15 in the third year . What dollar wage must be paid in the third year? A Year CPI Nominal Salary Real Salary 1 1. 00 10 Y1=10 2 1. 07 X1 Y2=(Y1+3%) 3 1. 15 X2 Y3=(Y2+3%) Y2 = 10+10*0. 03 = 10. 3 (Real Salary Second Year) Y3 = 10. 3 + 10. 3*0. 03 = 10. 609 (Real Salary trinity Year) X1 = 10. 3*1. 07 = 11. 021 (Nominal Salary Second Year) X2 = 10. 609*1. 15 = 12. 20 (Nominal Salary trine Year)