Chapter 5 (Prices and Unemployment) Worksheet

Chapter 5 (Prices and Unemployment) Worksheet - VYHUYNH...

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VY HUYNH Chapter 5 Worksheet Macroeconomic Measurements, Part I: Prices and Unemployment Worksheet ECN211 – Huntsinger Section I:  How to Approach the Study of Macroeconomics 1.   “ Macroeconomics  is  the branch  of economics  that  deals with  __the  entire  economy__”. 2. What are two examples of macroeconomic problems? *High unemployment rate. *Recession: A recession is defined  as  a  period  of two or more successive  quarters of decreasing production.  *High inflation rate. …. 3. Why do macroeconomists build theories?  What is the point? When   macroeconomists   encounter   macroeconomic   problems,   certain  questions naturally come to mind. To answer their questions ( questions  that do not have obvious answers), macroeconomists build the theories. Not all macroeconomists agree on the causes of certain macroeconomic  problems. 1
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We will encounter a number of macroeconomic theories in our discussion  of macroeconomics. We will encounter theories that attempt to explain  such   things   as   changes  in  the   price   level,   changes   in   unemployment,  changes in interest rates, and so on. 4. a.   How are macroeconomic policies related to macroeconomic problems and  theories? To   solve   certain   macroeconomic   problems,   macroeconomists   often   propose  certain   types   of   policies.     Macroeconomic   policies   are   developed   into   the  theories. The two types of macroeconomic policy that we will discuss include fiscal policy  and monetary policy. b. Give an example of a macroeconomic policy proposal.                   A proposal to decrease the rate of growth of the money supply. 2
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5.  Not all macroeconomists agree on how the economy works.  Give an example of  where economists might disagree on how the economy fundamentally responds  to a problem facing it. Not all macroeconomists agree on how the economy works. Example:  One macroeconomist might think that the Demain-side (simply a lack  of  aggregate demand;  When there isn't enough demand employers will not need  as many workers, and so  demand-deficient unemployment  results)  is the cause  of unemployment, whereas another macroeconomist might think that the Supply- side (factors results from imperfections in the labour market) is the cause of high  unemployment. Section II: Three Macroeconomic Organizational Categories 6.  In the P-Q Category, P = the symbol we use for the price level.
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