Intermediate Macroeconomics - 1. Consider an economy that initially has a labor force of 2000 workers. Of these workers, 1900 are employed and each works 40 hours per week. Ten units of output are produced by each hour of labor. a. What is the total number of hours worked per week in the economy? What is the total output per week in the economy? What is the unemployment rate? b. The eco...

Intermediate Macroeconomics - 1. Two economies, Hare and Tortoise, each start with a real GDP per person of $5000 in 1950. Real GDP per person grows 3% per year in Hare and 1% per year in Tortoise. In the year 2000, what will be real GDP per person in each economy? Make a guess first; then use a calculator to get the answer. 2. Over the past twenty years an economy’s total output has grown...

Intermediate Economics - 1. Desired consumption and investment are C^d = 4000 – 4000r +0.20 Y; I^d = 2400 – 4000r. As usual, Y is output and r is the real interest rate. Government purchases, G, are 2000. a) Find an equation relating desired national saving, S^d, to r and Y. b) What value of the real interest rate clears the goods market when Y = 10,000? Use both forms of the goods...

Intermediate Macroeconomics - 1. Output, total hours worked, and average labor productivity all are procyclical. a) Which variable, output, or total hours worked, increases by a large percentage in expansions and falls by a larger percentage in recessions? (Hint: Average labor productivity = output / total hours worked, so that the percentage change in average labor productivity equals the pe...

Intermediate Economics - 1. Consider an economy in long-run equilibrium with an inflation rate, π, of 12% (0.12) per year and a natural unemployment rate, ū, of 6% (0.06). The expectations-augmented Phillips curve is π = π^e – 2(u – ū). Assume that Okun’s law holds so that a 1 percentage point increase in the unemployment rate maintained for one year reduces GDP b...