review_exam1

review_exam1 - GDP part) 4. Some economists think that...

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Review Session, Exam 1 (plus the two MyEconLab question posted to Learn) 1. Draw the labor market graph assuming we are in equilibrium and assuming that labor supply is vertical. Explain the assumptions that give labor demand its slope. Explain the justification for giving labor supply its slope. 2. Using your graph from Question 1, show the impact of a decrease in the capital stock on the market for labor. Show graphically and explain what is going on in your graph. 3. Given your answer to question 2, what will be the impact of a decrease in the capital stock on real GDP? (no graph needed for the
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Unformatted text preview: GDP part) 4. Some economists think that labor supply is better-described as having a positive, but not infinite, slope. Explain two things weve seen in the data that might support that belief. 5. If labor supply had been upward-sloping, rather than vertical, in your graphs for question 2-3, would the impact on GDP have been larger or smaller?? Explain briefly. 6. If we are borrowing from foreigners, what does that mean for GDP today? What does it mean for GDP in the future? Explain....
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