Sonoma State University Department of Economics ECONOMICS 304 Florence Bouvet Assignment 4 Due Date: October 28 th at the beginning of lecture Please tum in your answers on a separate page. 1) Concerned about the high unemployment rate in France, the French government passed a law in 2002 that required the legal work week be shortened from 39 hours to 35 hours. Salaries paid per week were required to stay the same. This was supposed to lower unemployment, because employers would have to hire more people to produce the same amount of output. According to our theory of unemployment in chapter 6, would this plan succeed in lowering the natural rate of unemployment? Describe at least two policies you might recommend instead. For the two policies you list, would they affect frictional or wait unemployment in particular? 2) Consider an economy with the following Cobb-Douglas production function: Y = F(K,L) = K 1/3 L 2/3. The economy has 1000 units of capital and a labor force of 1000 workers. a)
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This note was uploaded on 04/07/2011 for the course ECON 304 taught by Professor Eyler during the Fall '07 term at Sonoma.