Answers
questionnaire-on-classical-model
- Module
- Macroeconomics
- Institution
- The University Of Manchester (UOM)
complete question and answers on classical model. exam based questions
[Show more]
Content preview
Questionnaire on Classical Model-Closed Economy1. Use the neoclassical theory of distribution to predict the impact on the real wage and the
real rental price of capital of a wave of immigration increasing the labour force. (carried over
from Sem. 4)
2. Use the neoclassical theory of distribution to predict the impact on the real wage and the
real rental price of capital of an earthquake destroys some of the capital stock.
(carried over from Sem. 4)
3. Use the neoclassical theory of distribution to predict the impact on the real wage and the
real rental price of capital of a technological advance that improves the production function.
(carried over from Sem. 4)
4. Use the neoclassical theory of distribution to predict the impact on the real wage and the
real rental price of capital of high inflation which doubles the price of all factors and outputs
in the economy. (carried over from Sem. 4)
5. Let’s use the neoclassical theory of distribution to examine the incomes of two groups of
workers: farmers and barbers. (carried over from Sem. 4)
(a) Over the past century the productivity of farmers has risen substantially because of
technological progress. According to the neoclassical theory, what should have
happened to their real wage?
(b) In what units is the real wage in part (a) measured?
(c) Over the same period, the productivity of barbers remained constant. What should
have happened to their real wage?
(d) In what units is the real wage in part (c) measured?
(e) Suppose workers can move freely between sectors, what does this imply for the wages
of the two groups?
(f) What do your previous answers imply for the price of haircuts relative to the price of
food?
6. Suppose that an increase in consumer confidence raises consumers’ expectations about
their future income and thus increases the amount they want to consume today. This might be
interpreted as an upward shift in the consumption function. How does this shift affect
investment and the interest rate?
7. The government raises taxes by €100billion. If the marginal propensity to consume is 0.6,
what happens to the following? Do they rise or fall? By what amount?
(a) Public saving.
(b) Private saving.
(c) National saving.
(d) Investment.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller abhay. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £5.48. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73918 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now