CH3SQ - Mankiw Chapter 3 Study Questions 1. (30 points)...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Mankiw Chapter 3 Study Questions 1. (30 points) Using the model developed in Chapter 3 of the textbook, explain the effects of the following exogenous events on the level of aggregate output, the real wage rate, and the real rental price of capital. Provide a separate answer for each part of this question. (HINT: Use the appropriate graph, shift the appropriate line in the appropriate direction, and see what happens to the variables on the axes.) a. (10 points) The labor force increases because of a large increase in the labor force participation rate of adult women. b. (10 points) The capital stock increases, and this in turn increases the marginal product of labor. c. (10 points) A war destroys much of an economy's capital stock but causes only a small decrease in the country's total population. 2. (10 points) Suppose that in an economy Y is temporarily larger than (C+I+G). Will the real interest rate (r) tend to rise or to fall? Explain in 2 or 3 sentences. 3. (10 points) Problem #5 on page 70 of the Mankiw textbook. 4. (10 points) Suppose that over a period of time, the following things occur in an economy: (i) the real wage rate (W/P) increases, (ii) aggregate output (Y) increases, and (iii) the real rental price of capital (R/P) decreases. Describe a set of exogenous
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/30/2008 for the course ECO 3307 taught by Professor Green during the Spring '08 term at Baylor.

Page1 / 3

CH3SQ - Mankiw Chapter 3 Study Questions 1. (30 points)...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online