(B) Using the information below, explain the adjustments that will be taken by firms and workers to move the economy to a long-run equilibrium, specifically in terms of costs of - production, real and nominal wages, and prices of products. Assume that firms and workers have adaptive expectations The current unemployment rate = 4%. - The natural rate of unemployment = 5%. Last year's inflation rate = 2%. This year's inflation rate = {c) The workers in the oil and gas industry in Alberta are paid an average of $68.50 per hour, and through their collective bargaining agreement, they have incorporated a 3.5 percent annual raise in their contracts to account for anticipated inflation. Suppose there is unexpected inflation of 2.8% percent instead. Explain how this will affect the real wages of these workers and the unemployment rate of these workers. =z 8 I o Div b Mo~ W Explain the initial effect of each of the following events on Canada's GDP. a) Toby sells his used car to Maria. b) The value of your Home Depot stock holdings decrease. c) You use $100,000 to buy a piece of land with the intention of building a new house on it. d) Sharon buys a new pair of jeans at a department store in another town in her province. e) An Irish tourist drinks an American beer in a Canadian restaurant. f) Your local car dealership reduces its inventory by offering price reductions. g) You sell all the shares in your Canadian National Railway Company holdings. h) Jermaine travels with Air Canada to Grenada and buys rum and spices. () Bickram gets a haircut and beard trimmed at his local barbershop. j) Katherine, a retired worker, gets an increase in her Canada Pension Plan benefits. i v B Go SS U S X2 xz E E I1365 MyYU - MyYU & Docusign My Courses | Stude.. Library - MyYU Suppose in 2013 the total output in a single-good economy was 7,000 crates of pineapples and each crate of pineapples was priced at $10. Also, suppose in 2015 the price per crate of pineapples was $16 and 22,000 crates were produced in this economy. (a) Using 2015 as the base year, calculate the GDP price index for 2013. (b) By what percentage did the price level, as measured by this index, rise between 2013 and 2015? (c) Calculate the values of real GDP in 2013 and 2015. Show ALL calculations where possible. i - B I SS U S X2 Xz = E E COMOLIDEcheck. Yorkville app My Perfect Resume. My Courses Home | Microsoft 365 MyYU - MyYU Docusign My Courses | Stude. Library - MyYU a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Planned Government Real GDP Consumption Investment Purchases Net Exports $1,000 $1,000 $100 $150 $50 2,000 1,900 100 150 -50 3,000 2,800 100 150 50 4,000 3,700 100 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. "If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? if the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP? B I TAY SS US X z x 2 E O M 1 05a) What three institutions do you consider are the most important for a country's economic growth? Briefly explain. .\\bi(b) Suppose a \"leader country\" has a real GDP per capita of $50,000, whereas a \"follower country\" has a real GDP per capita of $25,000. Next, suppose there is a mitry take leader country which causes the growth of real GDP per capita to fall to zero percent. In the meantime, real GDP per capita growth in the follower country rises to 5 percent. continue for a long period of time, how many years will it take for the follower country to catch up to the living standard of the leader country? . (c) If you were to hold the size of the labor force in an economy constant, how would increasing the spending in capital goods help to make workers more productive and increas: economic growth? What about the effect on economic growth from increasing the size of the labor force through population growth while physical and human capital remain const: { (a) You have read all the time that trade brings net benefits to nations open to it. But are there any costs or drawbacks that come with open global trade? (b) Consider a country that is open to trade, but is using protectionist policies like tariffs and quotas. Why do you think that most consumers do not vigorously oppose these protectionist policies? (c) Suppose the country in (b) imports and exports goods and services from more than 80 different nations, but the bulk of its imports and exports tend to come from the same five nations. What might be the reasons that the majority of its imports and exports come from only five different nations as opposed to being more evenly spread across the 80 different nations that it trades with? B SS U S X2 x 2 E E 3 8 >(a) From the table below, calculate the M1 and M2 values of this economy's money supply. Value (in billions) Currency $95 Checkable deposits 25 i Traveler's checks 5 Savings deposits 130 Small-denomination time 65 deposits i Noninstitutional money market 60 mutual fund shares Money market deposit accounts 85 28 (b) Suppose the commercial banking system in Canada has a target reserve ratio of 3%. A new immigrant to the country makes a cash deposit of $2,000 into his bank. Fill in the table below 10 show how deposits, reserves, and loans change as the new deposit permits the banks to \"create\" money by making the calculations. What is the total change in deposits after the first five rounds of deposit creation? What is the total change in bank deposits created by this initial $2,000 deposit for all possible rounds of deposit? What is the total amount of new loans that can be created from the $2,000 deposit? Round A Deposits A Reserves| A Loans [First Second ' Third Fourth iFl.h (c) ! | | | ( Interest Rate My, (Y, P) Quanrity of Money ~ The graph shows the money supply and money demand at various interest rates. (a) Suppose the interest rate is at ix. Explain how firms and households attempt to satisfy their excess demand for money. What is the effect of their actions? (b) Suppose the interest rate is at iz. Explain how firms and households attempt to dispose of their excess supply of money. What is the effect of their actions? (c) Now suppose there is an increase in the transactions demand for money because of growth in real GDP. Beginning at i*, explain what happens in the money market. How is this shown in the diagram? Yorkville app P My Perfect Resume. My Courses Home | Microsoft 365 MyYU - MyYU Docusign My Courses | Stude. (a) Calculate the missing values (a - f) in the table below. Assume that real output rose 3.6% from 2017 to 2018. Show your calculations. Year Real Output Nominal Output| GDP deflator (2020 = 100) 2015 5,161.92 2,789.50 (a) 2016 5,291.61 (b) 59.12 2017 - (c) 3,255.00 62.73 2018 _ (d)_ (e). 65.21 2019 5,813.18 3,933.20 ( f ) _ (b) Why do you suppose all of the GDP deflators are less than 100? i B I Go SS U S X2 x 2 E C #