HW11_Ch10_Ch11_key

# HW11_Ch10_Ch11_key - /30 Name Section Number CRecitation...

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Unformatted text preview: /30 Name: Section Number: CRecitation Leader’s Name: 1. L /i Homework 11, Due May 2 A firm believes that the relationship between the real wage it pays and the effort exerted by its workers is given by the following table. Real Wage (w) Effort Level (E) E: [w 15 12 , g) 18 j— 15 I p 1% is i- 21 21 | i Q (”j:if“f“:i”’3‘0§ lo 27 33 I ’49 30 35 Li {MT} The marginal product of labor for this firm is where a. MPN = E(2oo — N)/3o, E is the effort level and N is the marginal product of labor. If the firm can pay only one of the six real wage levels shown in the table, what real wage will it pay? How many workers will it employ? l w 55’ 715% j i mem.,,mm~wm4ww;\ Wok P Suppose that a big inﬂux of workers enters the town, willing to work at a real wage of 15. How would that change your answer above? (Mejia) (tag; 2. Use the Keynesian model to analyze the effects of each of the following events on output, the real interest rate, employment and the price level in the short run and in the long run. Include appropriate graphs in your answer. a. The government provides a tax incentive that causes an increaseminﬁdﬂesirﬁedinvestment; The lost tax revenue is replaced by an increase in lump sum taxes. Short Run / Long Run Table a. P Short “/9 Run' . I‘ f? Y rt Long Y Run: A (:3 N ﬂair) W m: I‘ r b. Consumers respond to news that their future incomes will be lower by decreasing current consumption. (5;? gay {/23 {ﬂirt ) F Short Run / Long Run r" Table 21. _| P Short ”“49 Run' ' I‘ 6:) m 4 4/ J Long Run: c. A change in government regulation allows banks to pay a higher interest rate on their checking accounts. Short Run / Long Run Table a. P Short at?) Run: 1' [IF Long l—Y Run: “/53 N PM} W km) 1' MA} (1 S m; ;___ Id ﬁtter} Cd ﬂame) P s \é’é’ ...
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