a. Briefly explain how an effective minimum wage causes a structural unemployment. b. With the aid of a demand-and-supply diagram, illustrate the effect of an economic recession on a labour market with an effective minimum wage.
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Statutory Minimum Wage (SMW) has come into force since 1 May 2011 in Hong
Kong. The current SMW rate is $37.5 per hour.
a. Briefly explain how an effective minimum wage causes a structural
b. With the aid of a demand-and-supply diagram, illustrate the effect of an
economic recession on a labour market with an effective minimum wage.
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- Discuss the three main supply-side policies that the government can use to reduceunemployment?The figure on the right depicts the labor market in equilibrium with employment at 100 million jobs. (Enter your response as an integer.) Suppose traditional monetary and fiscal policy has had only limited success in promoting higher employment. Governments sometimes seek to directly stimulate hiring by the private sector by engineering a shift in the labor demand curve. In the graph of the market, suppose the government seeks to directly stimulate the employment of an additional 20 million workers. 1.) Using the line drawing tool, shift the demand curve such that this employment target is achieved. Carefully follow the instructions above and only draw the required object. According to your graph, the targeted increase in employment can be achieved with the payment of a subsidy to employers of $ per worker. (Enter your response as an integer.) C Wage 20- 18- 16- 14- 12- 10- 8- 6- 4- 2- 20 40 The Labor Market Labor supply curve Labor demand curve 60 80 100 120 140 160 180 200 Quantity…Suppose the marginal product of labor in the economy is given by MPN = 200 – 0.5N, while the supply of labor is 100 + 4w Find the market-clearing real wage rate What happens if the government imposes a minimum wage of 40? Is there involuntary unemployment? What happens if the government imposes a minimum wage of 60? Is there involuntary unemployment?
- 4.2 List and discuss two (2) reasons for the downward sloping shape of theaggregate demand curve.О Масro есonomy Which of the following are examples of the "invisible hand" that characterizes Ivalice's economy? The town of Sprohm lowers its income tax. Many peasants move to Sprohm to take advantage of the lower cost of living. Save The Queen, an armorer, chooses to produce fewer swords when the price of steel increases. Kupopo! Delivery, a transport business, routinely uses a blimp to move food supplies from the farms to the queen's castle. To increase sales, the singing sensation Hurdy and the Bros sells its CDs for $5, $1 cheaper than another popular band, Montblonc and the Knights. MacBook Air O00 000 DII DD F4 F5 F6 F7 F8 F9 F10 F11 & *What is the role of aggragate demand in eliminating the GDP gap?
- Describe how different parts of the economy may have experienced shifts and changes in supply and demand. Provide at least 4 examples.Consider the market for loanable funds. Suppose the demand for loans is given be i=9-Q+π, and the supply of loans is given by i=Q/2+π, where π represents inflation. Now suppose that π=5 (instead of 3, in the previous problem). What is the equilbrium quantity of loans and what is the corresponsing interest rate? Q*=8, i*=6 Q*=3, i*=6 Q*=6, i*=8 Q*=6, i*=6Suppose that a consulting firm has generated the following information about the economy of Growville: (i) The current employment in export industries is 50,000; (ii) The current total employment in the city is 150,000; (iii) Export employment is expected to grow by 10,000 jobs. Is there enough information to accurately predict the effect of the increase in export employment on total employment? If you have enough information, predict the employment effect and illustrate your answer with a graph. If there is insufficient information, proceed with the analysis as far as you can and list the additional information you need to complete the analysis. Illustrate your answer with a graph.
- John Maynard Keynes claimed that the equilibrium level of employment, for the economy as a whole, depended on the effective demand for output. Explain what Keynes meant by the effective demand for output. Is this equilibrium level of employment always consistent with full employment? What would happen if wages fell due to unemployment? Elaborate.Consider the following dialog between Amy, an economics student who currently studies macroeconomics, and Deborah, her teaching assistant.AMY: Hi Deborah, I'm working on my Aplia homework and realized that I do not understand the definition of the labor force very well. Does it include discouraged workers? DEBORAH: Hi Amy, the conventional definition of the labor force excludes discouraged workers. This is because they gave up looking for jobs . Also, be sure not to mistake discouraged workers for part-time workers. The key difference is that the latter cannot find suitable full-time jobs . AMY: I think I understand it now, thank you. DEBORAH: Let me ask you a question to see if you can apply your knowledge. Consider an economy with 20 full-time workers, 16 part-time workers, 10 workers who have been laid off but are actively looking for a new job, and 3 formerly full-time workers who have been without a job for over a year, failed to find any, and gave up looking. Can you…Suppose that the policy-makers of a foreign country decide to enact policy that reduces unemployment (at the expense of higher prices) just before an election. At the time of the election, however, the reduction in unemployment is much greater than expected, and the pesky inflation increase never occurs. The graph illustrates the economy before the government attempts to reduce unemployment. Change the graph to illustrate changes in the economy that could result in lower unemployment without an increase in prices. Note that LRAS represents long-run aggregate supply, SRAS represents short-run aggregate supply, and AD represents aggregate demand.