in high tech industries for defense? Explain briefly. B) Demographic characteristics of the population also affect the natural rate, according to this model. Identify and explain briefly how each of these two scenarios might affect the natural rate, giving a short explanation. First, the population is characterized by having an age-group that is unusually large, such as the "war-baby" generation that was born shortly after WWII. How might the aging of this group --they are now in their mid-fifties--affect the overall natural rate of unemployment for the economy? The second situation is to consider a groupBlet=s call them womenBwho are more flexible about hours and types of jobs they will take. Suppose that over time the labor force participation of this group grows; how would the natural rate of the economy change? 5. Let's talk some more about economic growth. A) According to the "historical growth accounting" analysis, what have been the three most important factors determining growth of the economy, in the second half of the twentieth century? What would be the relative ranking of these three, in terms of their contribution to our growth? B) Which of those three factors is usually blamed for the "Productivity slowdown" of the 1990s? C) In terms of our growth accounting formula, with a weight for labor of 0.6 and for capital of 0.4. What happens to the economy's overall growth rate if the rate of growth of population falls from two percent to one percent? If technological change occurs at 0.75% per year, the target rate of growth of real GDP is 3 percent, and the population is growing at 2 percent, what must be the growth of the capital stock? D) Explain real simply what is meant by Aendogenous growth theory, perhaps illustrating your answer by comparing it to Solow's growth theory. The median on this exam was 61, the high was 92. Econ 301 Exam #2 Winter, 2003 Professor Twomey Please PRINT your name on the BACK of the last sheet. You will lose credit if your name appears anywhere else. Answer on these sheets, using the flip sides if necessary. Questions are equally weighted. Be sure to label the axes on the graphs. If any question is unclear, please ask for a clarification. Good luck!
rule, and which worsen it? Explain briefly. a. A stable or an unstable velocity of money b a steep or a flat IS curve c a stable or an unstable demand for money d. accurate or inaccurate forecasts of the main economy aggregates The median on this exam was 60. The high was 94 Econ 301 Exam #3 Fall, 1994 Professor Twomey Please PRINT your name on the BACK of the LAST sheet. Answer on both sides of these sheets, as necessary. Ask for clarification of any unclear question. Questions are equally weighted. Good luck. 1. Identify the following with a sentence or at most two: a) natural rate b) policy ineffectiveness postulate c) hysteresis d) transitory income e) efficiency wage 2. State and explain briefly three components of the user cost of capital. How will government fiscal (or monetary) policy affect each of those three components, if at all? Explain briefly. What is the difference between intendedand unintended inventory accumulation, and why might it be important? 3a). Explain and illustrate with a graph (or two) how the predictions would differ between a Keynesian and a New Classical Economist, as to what would happen be the short term effect in the labor market if there were an expected increase in the money supply. According to our text, with which - if any - of these two visions would a monetarist agree, and why? 4a). Show on a graph how, according to the Life Cycle Hypothesis, a person's savings would be expected to change over time. Explain briefly how that relationship would change if: a) social security programs were eliminated b) there were a stock market crash during the person's middle age c) the person were poor and did not have good access to capital markets as a youth 5) In the text we studied two new orientations in macroeconomics, called real business cycle and new keynesian. The following are some factors which, according to one (or both) theory(ies), will affect output and employment. For each one, identify which model, state how the factor would affect output and employment, and explain the reasoning used by the particular school. Sometimes graphs help in these explanations. i) There is a decline in unionization in the economy's labor force