Question

Which of the following raises the structural unemployment rate?

I. higher union membership
II. more unemployment benefits
III. higher minimum wages

Group of answer choices

A I and II only

B II and III only

C I and III only

D I, II, and III

E None of the above

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Question 141 pts

Assume the economy is initially operating at the natural level of output. Suppose that individuals decide to increase their saving. Which of the following must decrease in the short run equilibrium and increase in the median run equilibrium?

Group of answer choices

A output

B interest rate

C price level

D investment

E consumption

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Question 151 pts

Suppose firms in the Australian economy have market power and, therefore, set prices P equal to the wage rate W plus a mark-up m on W (i.e. P = (1 + m)W). What would be the medium run effect(s) of an increase in the mark-up m, assuming everything else remaining constant?

Group of answer choices

A the RBA will raise the interest rate

B natural rate of unemployment will decrease

C investment will increase

D none of the above

E all of the above

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Question 161 pts

We can expect the IS-curve to become flatter as

Group of answer choices

A the supply of money decreases

B the marginal propensity to consume decreases

C money demand becomes more interest sensitive

D investment becomes less sensitive to interest rate changes

E none of the above

Answer 1

Which of the following raises the structural unemployment rate?

I. higher union membership
II. more unemployment benefits
III. higher minimum wages

Structural unemployment arises when there is an industrial reorganisation and hence there is a mismatch of the supply and demand for skills of the workers.

hence the answer is E. None of the above.

Assume the economy is initially operating at the natural level of output. Suppose that individuals decide to increase their saving. Which of the following must decrease in the short run equilibrium and increase in the median run equilibrium?

Group of answer choices

A output

B interest rate

C price level

D investment

E consumption

the consumption must decrease because to increase savings you must decrease consumption.

hence the correct answer is E.

Suppose firms in the Australian economy have market power and, therefore, set prices P equal to the wage rate W plus a mark-up m on W (i.e. P = (1 + m)W). What would be the medium-run effect(s) of an increase in the mark-up m, assuming everything else remaining constant?

Group of answer choices

A.The RBA will raise the interest rate

B natural rate of unemployment will decrease

C investment will increase

D None of the above

E all of the above

the natural rate of unemployment will increase. because as wage remains the same and Price is going up hence the Marginal revenue will go up to which will increase the MRP(L) marginal revenue product of the firms and they will employ more labour.

hence option B is correct.

We can expect the IS-curve to become flatter as

Group of answer choices

A the supply of money decreases

B the marginal propensity to consume decreases

C money demand becomes more interest-sensitive

D investment becomes less sensitive to interest rate changes

E None of the above

slope of the IS curve doesn't get affected by money market variables. hence A,C are incorrect.

IS curve becomes flatter if

I. sensitivity to interest rate change of the investment is more

ii. marginal propensity to consume is more

hence option B and D are also incorrect.

hence, here option E is correct.

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