Based on your understanding of the labor market model presented by Blanchard (i.e., the WS and PS relations), explain what types of policies could be implemented to cause a reduction in the natural rate of unemployment
What will be an ideal response?
The natural rate of unemployment will change whenever either the PS or WS relations change. To reduce the natural rate, policy makers could implement polices that: (1 ) reduce unemployment benefits; (2 ) reduce the minimum wage; or (3 ) increase competition in product markets.
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The cost of group health insurance is lower than if an individual buys a policy on his own because
A) moral hazard costs of a group tend to move to a low average. B) insuring a group eliminates the problem of buyers having more information than the seller. C) it is easier for the company to deny claims from a large group. D) the problem of adverse selection is reduced.
The greater the differentiation among the products of monopolistically competitive firms, the lesser is the price-elasticity of demand
a. True b. False Indicate whether the statement is true or false
Who benefits when the exchange rate of Japanese yen per dollar increases?
a. Japanese exporters b. Japanese tourists c. Japanese importers d. American exporters e. Japanese students in the U.S. whose source of income is money sent to them from Japan.
While Schumpeter's view that clusters of innovations can set off an innovation cycle is quite different from the views held by real business cycle theorists, they both
a. believe that cycles are not inevitable but the result of historical accidents b. believe that cycles are inherent and inevitable c. they both focus their analyses on technological change d. view the interaction of the multiplier and accelerator as the key factor prolonging the innovation cycle e. advocate strong countercyclical fiscal policy as a means of creating a more stable growth path for the economy