Application Problems Chapter 11

Application Problems Chapter 11 - Application Problems...

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Application Problems Chapter 11 BA206 Macroeconomics Robert McGill 18 Oct 2011 Application Problems 1
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1.2 How does the real wage rate at point c compare with the real wage rate at point a? How do nominal wage rates compare at those two points? Explain you answers. The real wage rate at point c is 10 points higher than point a. This shows an increase in the real wage rate. The nominal wage rate at point b is midway between the two points indicating a reduction in purchasing power of the real wage in the period of time measured, indicating inflation. 2.1 Answer questions a through f on the basis of the following graph: a. If the actual price level exceeds the expected price level reflected in long term contracts, the real GDP equals_ 14.2 _ and the actual price level equals _ 130 _ in the short run. b. The situation described in part a results in a(n) inflationary gap equal to $0.2 trillion . c. If the actual price level is lower than the expected price level reflected in long
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Application Problems Chapter 11 - Application Problems...

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