Macroeconomics

(a) The working-age population is 1,000. The labor-force participation rate is 60%. The unemployment rate is 10%. What is the number of the employed? (b) The nominal interest rate is 3%. The real interest rate is 1%. What is the rate of inflation? (c) The rate of growth of population is 1%. The rate of growth real GDP per capita is 0.5%. What is the rate of growth of real GDP? (d) The capital stock at the beginning of the period is $100. The gross investment during the year is $20. The depreciation rate is 5% a year. What is the rate of growth of the capital stock? In the following questions, answer by drawing the appropriate graphs and explain. Question 2. [20 Points] What is the effect of an increase in the saving rate on real GDP, real GDP per capita and the rate of growth of real GDP per capita in the short run and long run? Question 3. [20 Points] What is the effect of a sudden inflow of financial capital (loanable funds) on the real interest rate, employment, real GDP, real GDP per capita and the rate of growth of real GDP per capita in the short and long run? Question 4. [20 Points] What are the effects of immigration of unskilled and skilled labor (incorporating human capital) on the real GDP and real GDP per capita in the short and long run? Question 5. [20 Points] What are the effects of a sudden wave of pessimism about the returns to investment on employment and real GDP in the short and in the long run? [Note: By appropriate graphs it is meant some of the graphs of the labor market, loanable funds market, production function (with respect to labor or capital input), saving function

 

 

 

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