Macroeconomics Essay Example | Topics and Well Written Essays - 2250 words

Macroeconomics - Essay Example c. Inflation Rate (Current CPI - Last Year's CPI) / Last Year's CPI = ($95-$70)/$70 * 100% = 35.71% CRITICAL THINKING 1. c. I believe that the jobless recovery is most probably brought about by the weak confidence of the business sector on the economic recovery. They are hesitant of hiring new workers that they cannot sustain in the long run. In order to remedy this situation, they engaged in maximizing the production efficiency of individual workers to match the expected level of production. PROBLEM SOLVING 6. In the short run, prices and quantity supplied are stable. So, if demand changes, these factors will be unresponsive. It will just create an entirely different equilibrium. 10. a. Point B b. Improvements in technology and improvements in labor productivity c. Higher demand d. After the increase in aggregate supply, real GDP is greater than potential GDP. e. Increase in aggregate demand which is due to higher consumer expenditure, government expenditure, and investments will equate potential GDP with real GDP. PROBLEM SOLVING 10. a. Potential GDP will increase because of the higher labor force. b. Employment will be increase especially if all these immigrants secure new job opportunities. c. Real wage will go down because of the larger labor pool competing for jobs. CRITICAL THINKING 2. Memo Writing TO: MR PRESIDENT FROM: Student DATE: 7 SEPTEMBER 2007 TOPIC: INCREASING POTENTIAL GDP This is in response to your regarding the economic efforts which can increase the country's potential GDP. The following programs are recommended: 1. Training and development programs which can enhance the efficiency of human resource; 2. Higher wages that can motivate employees to work better; 3. Spending on research and development to improve...They are hesitant of hiring new workers that they cannot sustain in the long run. In order to remedy this situation, they engaged in maximizing the production efficiency of individual workers to match the expected level of production. b. China's GDP is growing because of capital increases in labor as well as other factors such as strong inflow of foreign investments. The effects of these factors can be separated by finding their individual dollar contribution. c. It should be noted that China has a higher population than the United States. However, it is forecasted that with the rapid increase in real GDP, the per capita real GDP will equal in the two countries in the mid-2040s. 2. I think baseball trading cards will be able to take the function of money in the economy. First, it is readily available to everyone, meaning everybody has an access to it as compared to tractor parts and impressionist paintings. As for store of value, it does not become stale like a loaf of bread. 8. Open market purchases operate in the economy by contracting demand causing a leftward shift in aggregate demand. This in turn, will lower the price level and GDP. This move decreases inflation in the long run while GDP is stabilized. b.