econ take home test 2

econ take home test 2 - Justin Murray Take-home test#2...

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Justin Murray Take-home test #2 3-27-08 Question #1 A. Long term economic growth comes from increasing the quality and quantity of factors of production in the economy. Some of these factors of production are natural resources, labor resources, and capital resources. The long run in economics is defined as a period of time in which all factor inputs can be changed. The firm can therefore alter the scale of production. If as a result of such an expansion, the firm experiences a fall in long run average total cost, it is experiencing economies of scale. The short run is a period of time when there is at least one fixed factor of production. This is usually the capital input such as plant and machinery and the stock of building and technology. In the short run, output expands when more variable factors are employed.
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B. Most growth in economic activities require some growth in consumption of resources . Growth encourages the creation of artificial needs: Industry cause consumers to develop new tastes, and preferences for growth to occur. There are also concerns with the environmental and ecological effects of economic growth, especially relating to growth in mining, forestry, agricultural and industrial activities. Question #3. A. Officially the unemployed are people who are registered with the government as willing and able to work at the going wage rate but who cannot find employment despite an active search for work. The unemployment rate is the percentage of the labor force that is unemployed. You get this by the number employed divided by the total number in the work force. B. Once again the unemployment rate is the number of workers without a job divide by the labor force. The unemployment rate only counts you if you are employed or unemployed. Under employed really causes a problem with this. A worker may want to be employed full time, but because of lack of work he is limited to part time. These people are still counted fully employed which the unemployment rate doesn’t account for. This also serves a problem with seasonal unemployment. A person is only counted as employed for a couple of months then is back being unemployed.
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C. Our labor force is growing faster than our economy. We have more labor in our economy which causes wages to be less and people to be laid off. I found that the “Federal Reserve limits growth to just 2% a year to help lessen inflation”.(Romer, 1998) If the economy isn’t growing fast enough for the employers the seek cheaper labor to continue their profit making. Employers are starting to take advantage of immigration workers who will do some of the same jobs as American workers for a lot less. All of this together is and “the War on Inflation” is making wages for those employed to go down and restricting our economy. D.
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This note was uploaded on 04/27/2008 for the course ECON 222 taught by Professor Balough during the Spring '08 term at Clarion.

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econ take home test 2 - Justin Murray Take-home test#2...

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