Chapter 6 Essay

Submitted By mishaestrin
Words: 686
Pages: 3
Open Document
The full employment model: full employment: demand for labor = supply of labor
Real wage: nominal wage adjusted for changes in the price level. EX: wage goes from 6 dollars per hour to 12 but prices double so real wage stays the same.
Real wage= nominal wage/ price level
Provides measure of the purchasing power of wages.
Real wages declined during the 1st half of the 1990s and by 2002 were little changed from 1980.
Aggregate demand for labor depends on:
1 wages firms must pay
2. prices firms receive for the goods/services they provide.
3. prices they have to pay for imputs like raw materials and equipment.
The reason demand for labor quantity increases as real wage drops.
1. It pays to substitute workers in place of machines (if cheaper)
2. Profits are greater so there is greater Incentive to expand production and hire more workers.
Rise in wage affects:
1. People will want to work more because the opportunity cost of leisure is now higher
2. People will want to increase their leisure consumption because of their higher income.
Shifts in demand and supply of labor:
Shifts in supply occur because:
1. Young people reach working age
2. Old people retire
3. Immigrants
4. Social changes such as the entry of more women into the labor force in 1970
When more people start searching for jobs the supply of labor increases and real wages drop to absorb the unemployment.
Short run aggregate production function: relationship between employment and output with a fixed amount of capital. Measures GDP with employment
Diminishing return of labor: as more workers are hired (with a fixed amount of capital) the output goes up but at a diminishing rate
Reasons for diminishing returns of labor
1. Best workers are hired 1st and eventually less skilled workers are not as productive.
2. With a fixed capital there is limited machinery for all so at a certain point 4 people to one computer doesn’t increase productivity by much
Full employment level of output: equilibrium level of output potential GDP
Short run aggregate production function is shifted upward when:
1. Increases in the stock of plant and equipment
2. New technology allows for more production
Demand and equilibrium output
Leakages= saving
Injections= investment
Total spending will = potential GDP if leakages at full employment = injections
Loanable funds market: supply of funds is allocated to those who wish to borrow
Household saving
Disposable income: how much income a household has after paying taxes
Tax increases decrease disposable income
Households will reduce consumption and saving when disposable income falls
Real rate of interest: market interest rate-inflation interest rate corrected for changes in prices
EX: market interest rate= 5% inflation = 3% real rate of interest = 2%
Household saving is relatively
Show More

Related Documents: Chapter 6 Essay

Chapter 6 Essay

N. Gregory Mankiw PowerPoint® Slides by Ron Cronovich CHAPTER 6 Unemployment © 2010 Worth Publishers, all rights reserved SEVENTH EDITION MACROECONOMICS In this chapter, you will learn: …about the natural rate of unemployment:  what it means  what causes it  understanding its behavior in the real world CHAPTER 6 Unemployment 2 Natural rate of unemployment  Natural rate of unemployment: The average rate of unemployment around which the economy fluctuates.  In a recession, the actual…

Words 2031 - Pages 9

Chapter 6 Essay

Chapter 6 Project Team Building, Conflict, and Negotiation 06-01 Chapter 6 Learning Objectives After completing this chapter, students will be able to: Understand the steps involved in project team building. Know the characteristics of effective project teams and why teams fail. Know the stages in the development of groups. Describe how to achieve cross-functional cooperation in teams. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 06-02 Chapter 6 Learning Objectives…

Words 693 - Pages 3

Chapter 6 Essay

RODRIGO GAMA BAPTISTA Chapter 6: HOMEWORK ASSIGNMENT due November 20, 2014 1. List and describe at a high level the steps involved in software requirements engineering process. Elicitation: is the practice of collecting the requirements of a system from users, customers and other stakeholders. Analysis: after the requirements are elicited and collected the set of data still unorganized that means that they must still be analyzed. The analysis consists in two main tasks: Categorizing or clustering…

Words 731 - Pages 3

Essay Chapters 6

Chapters 6/7 How was the Bedouin culture significant in shaping the development of Islam? What are the Five Pillars of Islam? What is the difference in Sunnis and Shi’as? What was the innovation of the Abbasid court with respect to women? What group successfully captured Baghdad in 1055/ What was the religious affiliation of the Seljuk Turks? Who was the Muslim leader who was responsible for the reconquest of most of the territories belonging to the Christian Crusaders? What was the impact of the…

Words 648 - Pages 3

Chapter 6 Essay

Chapter 6 - Taxable Income from Business Operations Chapter 6 Questions and Problems for Discussion 1. a. The annual business cycle for a plant and garden center might end in the late autumn indicating an October 31 or November 30 fiscal year end. b. A bakery has no obvious annual business cycle to suggest a particular taxable year. c. The annual cycle for a chimney cleaning business might end in late spring indicating an April 30 fiscal year end, or the cycle might end in early autumn indicating a September 30 fiscal…

Words 3272 - Pages 14

Chapter Summary Of 'Chapter 6: Frith's'

Chapter 6 is a creation story. Frith makes the animals, but the rabbits overrun the earth with their eating and multiplying. Frith has to do something about the rabbits so he sends out a message that he is holding a meeting, where every animal will get a gift. All the animals go to the gathering, except El-ahrairah. El-ahrairah is going to go though, and when El-ahrairah is on his way to go, a bird comes up to him and tells him what gifts Frith gave to the predators. The bird left, and El-ahrairah…

Words 888 - Pages 4

Chapter 6 Essay

Chapter 6 Infection Control Roles and Responsibilities of the CDC and OSHA The CDC is not a regulatory agency. Its role is to issue specific recommendations based on sound scientific evidence on health-related matters. Although not law, the CDC Guidelines for Infection Control in Dental Health Care Settings are now the standard of care. OSHA is a regulatory agency. Its role is to issue specific regulations, also called standards, to protect the health of employees in the United States. Failure…

Words 2185 - Pages 9

Chapter 6 Summary

As I began reading chapter six, the opening quote by Barth (1976, page 10) stood out to me. The quote speaks about the principal being the leading force in shaping the culture of the school and change factor of the schools culture, whether the change is positive or negative. The chapter discusses two types of leaders who both ultimately affected the culture of their respective schools. The first principal discussed lacked communication skills, he failed to acknowledge parents and guest during their…

Words 587 - Pages 3

Chapter 6 Outline Essay

Chapter 6 1608-1763 Duel of North America France finds Foothold in Canada -1598, Edict of Nantes issued by crown of France to grant religious freedom of Protestants and Catholics. Stopped religious wars -1608, France establishes Quebec (Catholic.) Lading figure: Samuel de Champlain, soldier and explorer aka. Father of New France -Gvmt. Of New France (Canada) was under control of King and people did not elect representative assemblies New France Sets Out -Contained beaver (valuable resource)…

Words 415 - Pages 2

Essay Chapter 6 3

Chapter 6 Compensation IBUS 618 Dr. Yang 1 Chapter Objectives In the introductory chapter we described IHR managers as grappling with complex issues:  Manage more activities from a broader perspective,  Be more involved in the lives of their far-flung employees  Balance the needs of PCNs, HCNs and TCNs  Control exposure to financial and political risks and  Be increasingly aware of and responsive to hostcountry and regional influences. In this chapter, all of these issues and concerns are…

Words 3365 - Pages 14