Chapter 7: Q.10 (page 162)
Between 2017 and 2018 in a particular nation, the value of the consumer price index for which the base year is 2014 -rose by 9.091 per cent, to a value of 120 in 2018. What was the value of the price index in 2017?
The value of the price index in is.
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Even after adjusting for price-level differences, because state income tax rates vary considerably across U.S. states, why might an income-threshold definition of who is "rich" yield very different results across states if it were to be based on after-tax incomes instead of before-tax incomes?
During the course of a year, the labour force consists of the same 1,000 people. Employers have chosen not to hire 20 of these people in the face of government regulations making it too costly to employ them. Hence, they remain unemployed throughout the year. At the same time, every month during the year, 30 different people become unemployed, and 30 other different people who were unemployed find jobs.
a. What is the frictional unemployment rate?
b. What is the unemployment rate?
c. Suppose that a system of unemployment compensation is established. Each month, 30 new people (not including the 20 that employers have chosen not to employ) continue to become unemployed, but each monthly group of newly unemployed now takes two months to find a job. After this change, what is the frictional unemployment rate?
d. After the change discussed in part (c), what is the unemployment rate?
This year's value of the economy's price index is 100, and people anticipate that next year's value will be 103. The current nominal interest rate is 5 per cent. What is the real interest rate?
Why do you suppose that some economists have suggested that "irrational exuberance"-unjustified optimism about future economic performance can contribute to business expansions?
Suppose that a nation has a labour force of 100 people. In January, Amy, Barbara, Carine, and Denise are unemployed. In February, those four find jobs, but Evan, Francesco, George, and Horatio become unemployed. Suppose further that every month, the previous four who were unemployed find jobs and four different people become unemployed. Throughout the year, however, three people-Ito, Jack, and Kelleycontinually remain unemployed because firms facing government regulations view them as too costly to employ.
a. What is this nation's frictional unemployment rate?
b. What is its structural unemployment rate?
c. What is its unemployment rate?
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