CHAPTER 8
The Natural Rate of
Unemployment and the
Philips Curve
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34
8-1
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Inflation, Expected
Inflation, and Unemployment
P P e (1 ) F ( u , z )
The above equation is the aggregate supply.
Exercise List 9
1. Briefly explain how an increase in A affects the aggregate supply curve.
2. The model of aggregate supply and demand indicates that increases in productivity will
always cause the a
Exercise List 3
1) Are the following statements true, false or uncertain? Explain briefly your answer.
a. If government spending and taxes increase by the same amount, the IS curve does not
shift.
b.
Exercise List 8
1. Label each of the following statements true, false or uncertain.
a. In steady state, output per worker grows at the rate of population growth.
b. In steady state, output per effecti
Exercise List 7
1. Consider the production function
a.
b.
c.
d.
e.
f.
g.
Y K N
Compute output when K=49 and N=81.
If both capital and labor double, what happens to output?
Is this production function
Exercise List 1
1) Consider an economy that produces only three goods. In the year 2007 the prices of
each good where p1=5, p2=10 and p3=15 and the quantities produced where q1=20, q2=25
and q3=10. In
Exercise List 6
1. For this question, assume that the Phillips curve equation is represented by the
following equation:
t - t-1 = -.75(ut - un). Given this information, calculate the sacrifice ratio f
Exercise List 5
1. Assume that the economy starts at the natural level of output. Now suppose there is a
decline in business confidence, so that investment demand falls for any interest rate.
a. In an
CHAPTER 6
The Labor Market
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35
2 of 39
Unemployment
Measuring Unemployment
In Turkey the unemployment rate is
calculated by TUK (Turkish State Institute of
Statistics) from 1988 under the rules se
Middle East Technical University
NCC, Department of Economics
ECO 202
Dr. Pnar Derin-Gre
Name_
Spring 2016
PROBLEM SET 1
Due Date: Thursday, March 10 , 2016 in class. No late problem sets will be acce
Exercise List 2
1) So far we have always assumed that the fiscal policy variables G and T are
independent of the level of income. In the real world, however, this is not the case. Taxes
typically depe