Feedback 5 – Labour Market, Exchange Rate Market & Financial Market
1) Mary Sue is the newly appointed CEO of a company that manufactures CD drives on an assembly line. Her staff has told her that the output the firm produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should she do? a) Pay all workers more than the equilibrium wage rate
b) Pay all workers below the equilibrium wage rate to make up for the loss from shirking c) Make sure that workers are getting paid exactly the equilibrium wage rate d) None of the above is correct according to efficiency wage theory.
2) Which of the following have a tendency to raise the unemployment rate? a) The establishment of effective trade unions in an economy b) Firms deciding to pay efficiency wages in an economy
c) Implementing a minimum wage in an economy
d) All of these are correct.
3) Which of the following causes the official measure of the unemployment rate to understate the true extent of joblessness? a) People who collect unemployment benefits report themselves to be searching for a job. b) Discouraged workers are not counted as unemployed.
c) Many full time workers really want to be part time workers.
4) Trade unions cause unemployment because the union contract wage is set a) above the market wage, causing a shortage of labour.
b) below the market wage, causing a surplus of labour.
c) below the market wage, causing a shortage of labour.
d) above the market wage, causing a surplus of labour.
5) Which of the following explanations are consistent with the Figure above? a) Speculators think that the value of the dollar relative to the euro will rise. b) A recession in the European Union
c) An increase in Australian interest rates relative to interest rates in other countries d) An increase in incomes in the European Union
1. Economics studies _____.
How society manages its scarce resources
ethical use of resources
protection of workers' rights
1. GDP ______
Is the Gross Domestic Price Index
Measures the market value of all final goods and services produced in the U.S. in a given year
Measures the cost of inputs to factories in a given year
Measures the unemployment rate
1. Inflation results in _____.
A general decrease in the price level
An increase in the number of goods that are manufactured during a given year by domestic firms
A decline in the purchasing power of money
An increase in the purchasing power of money
1. Unemployment rate is calculated as the ratio of ______
Number of unemployed to the number of employed workers
Number of unemployed workers to the population.
Number of unemployed to the adult population.
Number of unemployed to the labor force.
1. Everything else held constant, when the price of a product increases _____.
The quantity demanded decreases
The quantity demanded increases
The quantity supplied decreases
The quantity supplied stays the same.
1. When the demand of a product increases _____.
The equilibrium price and quantity will decrease
The equilibrium price and quantity will increase
The equilibrium price will increase and the equilibrium quantity will decrease.
Using the expenditure approach, which of the following would be included in U.S. GDP? a. The value of the groceries you buy at the store. b. The value of an automobile purchased by Hertz to be rented out later to customers. c. The value of steel that was produced but not sold during the year. d. All of the above. e. None of the above.
Which of the following would be considered "government purchases" when measuring GDP? a. The salary of a city police officer. b. U.S. government social security payments to retired workers. c. The groceries that a U.S. postal worker buys at the store. d. All of the above. e. None of the above.
Suppose that, in a given year, consumption spending is $5 trillion, exports are $3.2 trillion, imports are $4 trillion, government transfer payments to households are $2 trillion, business spending on plant and equipment is $1 trillion, new housing construction is $0.5 trillion, government purchases of goods and services are $3 trillion, taxes are $3.5 trillion, and inventories of unsold goods during the year decline from $4 trillion to $3.3 trillion. Then using the expenditure approach, GDP during the year is a. $6 trillion. b. $8 trillion. c. $10 trillion. d. $11.2 trillion. e. $12 trillion
Suppose that, in a given year, a country's GDP using the expenditure approach is $5 trillion. Then, during that year, the total income earned by the owners of the country's resources (or factors of production) will be a. $5...
...PRINCIPLES OF ECONOMIC
(DIFFERENCE BETWEEN MICROECONOMICS AND MACROECONOMICS)
CERTIFICATE IN ESTATE AGENCY (CEA)
HAFIFI BINTI HAMDAN
LECTURER: MRS. NORZIHA BINTI ISMAIL
DIFFERENCE BETWEEN MICROECONOMICS AND MACROECONOMICS
The study of economics is divided into microeconomics and macroeconomics by the modern economists. Both of them discuss the economic activities but are used in different sectors under different circumstances. In spite of having some similarities, they also have some differences which have been given below:
(a) Name Origination :
The word ‘micro’ comes from the Greek word ‘mikros’ which means ‘millions of
parts’. And the word ‘macro’ is also from a Greek word ‘makros’ which means
(b) Definition :
Microeconomics –Study individual economic units such as households and
Macroeconomics- deals with economy as a whole, It study the aggregate
behaviour of the entire economy.
(c) Theory :
Microeconomics - price theory which is the combination of theory of demand
and theory of production.
Macroeconomics - called income theory that explains the result of total...
Minimum Wage Policy and the influence it has on the economy
As wage is one of the key elements to which people attach greatest importance
when finding and choosing a job, wage policies of a country can do a lot more to
the economy of the society in many aspects such as employment, productivity,
inflation than we people often thinks they can.
Every country has its own wage policies, which is due to their political structure and
many more other factors. Different wage policies have different influence to various
extents and in various fields, and every one has its own advantages and
disadvantages, so it can be a eternal goal and topic to make up for one’s
deficiencies by learning from others’ strong points, although it seems a little
imaginary or too difficult to achieve.
As the best-known policy by the popularity in the wage policies, the minimum wage
policy is what I am going to focus on in this essay, and I will arrange the importance
and influence of minimum wage policies in the various aspects in economics
The difference among the minimum wage policies in different countries
By now, all the developed countries and most developing countries have formulated
such policy or something with similar function. Although they are all about the
minimum wage, their being put into practice and the details about the requirements,
norms, general level, scope of application and the flaws in it and so on are all
different, triggering the difference in their affects and...
What is the study of macroeconomics concerned with? Discuss in detail the major macroeconomics issues known to you.
Macroeconomics is concerned with the economy as a whole, as one very large market. It looks at how the government manages the economic market as well as economic growth and living standards, Unemployment, Inflation, Business cycles, Including its recessions and expansions.
All majorMacroeconomics issues play a critical role in the economic activities as a whole.
Economic Growth and living Standards
Economic growth shows the rate of growth of national output, the steady increase in the quality and quantity of goods and services the economy can produce
Standard of living in macroeconomics gives people their needs and wants to make their lives healthier, safer and enjoyable.
In macroeconomics unemployment refers to number of people looking for work, but not currently have a job.
It is an issue as it all has to do with how the economy is doing. With less demand in products, firms need fewer workers. Therefore it means workers losing their jobs, leading to unemployment.
Inflation is the frequent increase of price in money. In macroeconomics, inflation is an issue as it affects the supply and demand in price levels and national output.
The Business cycle consists of four...
News Article Analysis (I)
Topic: Inflation and Unemployment
Headline: Economics Watch
Source: The Edge Malaysia (from LexisNexis database)
Date: 26 October 2009
Malaysia’s Consumer Price Index (CPI) experienced a decrease – the fourth consecutive month of decline for the index that measures the country’s inflation. The decrease in index from last year December to this year December is due to the changes in petrol and diesel prices. However, there was an increase in CPI during the period of January to December 2008 to 2009.
Consumer Price Index (CPI) is a measure of the average prices of a fixed “basket” of goods and services purchased by consumers. The price level can be measured using the CPI.
Inflation is defined as the persistent and sustained increase in the price level of goods and services in the economy. Inflation occurs when the average prices of goods and services rises, and not the change of one price. An increase in price level is known as inflation, while a decrease is known as deflation.
Inflation rate is the annual percentage change in price level. As mentioned in the article, Malaysia’s CPI decreased 2% from 114.7 (last year, September) to 112.4 (this year, September), with changes in price of petrol and diesel prices being the cause for decline.
Annual Inflation Rate = (CPI this year – CPI last year) X 100%
CPI last year
= (112.4 – 114.7) X 100%
...Chapter 1: The Science of MacroeconomicsMacroeconomics is the study of the economy as a whole. It addresses many topical issues which includes growth in incomes, changes in the overall level of prices, and the unemployment rate. Macroeconomists attempt to explain the economy and to devise policies to improve its performance.
Economists use different models to examine different issues. Macroeconomic events and performance arise from many microeconomic transactions, so macroeconomics uses many of the tools of microeconomics.
Economic models are simplified versions of a more complex reality. Irrelevant details are stripped away. Example of a model is the supply and demand for new cars, the model shows how various events affect price and quantity of cars and it assumes that the market is competitive: each buyer and seller is too small to affect the market price.
No one model can address all the issues the people care about. The supply-demand model of the car market can tell how a fall in aggregate income affects price & quantity of cars. And cannot tell why aggregate income falls.
Endogenous and exogenous variables are used to show relationships between variables explain the economy’s behavior devise policies to improve economic performance.
Models with flexible prices describe the economy in the long run; models with sticky prices describe economy in the short run.
Chapter 2: The Data of...
...Introduction to Macroeconomics
Introduction to Macroeconomics
Economics is divided into two main branches: microeconomics and macroeconomics.
Macro means large, and micro means small.
Microeconomics takes a close-up view of the economy by concentrating on the
choices made by individual participants in the economy such as consumers, workers,
business managers and investors.
Microeconomics stresses on the role of prices in business and personal decisions. One
of its major goals is to understand how prices of particular goods and services are
determined and how prices influence decisions. Because of this reason,
microeconomics is sometimes called price theory.
Macroeconomics looks at the economy from a broader perspective by considering its
It is the study of aggregate economic activity. Aggregate economic activity is the
performance of the economy as a whole – the economy in the aggregate.
Examples are people’s incomes and living standards, unemployment; inflation –
rising prices – and changes in the value of money.
Examples of Differences between Micro and Macro:
The study of smaller scope
Individual decision making units
Production of particular product
Attention to specific units
The stud of bigger scope