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Show how education can signal the worker's innate ability in labor market. What is a pooled equilibrium? What is a perfectly separating signaling equilibrium?
Debbie has just finished high school and is about to decide which type of education to get. What career will Debbie pursue if the discount rate is 5 percent?
What happens to a worker's optimal amount of schooling if the rate of depreciation increases?
Discuss what happens to the signaling value of a person's education. Can there be a perfectly separating equilibrium in this labor market?
How much can the available information tell us about Jane's, Pam's, and Mary's discount rates?
Collusion between firm necessarily undesirable? Describe and account for differences in expenditure on advertising between industries.
How would the slope of the aggregate demand curve in an economy differ if the real balance effect was (i) relatively strong; (ii) relatively weak?
Is the natural rate of output the full employment level of output (i) in the short run; (ii) in long run? When will output of an economy be at the natural rate?
When might a country prefer to impose quotas on imports rather than levy a tariff? If the Uruguay Round succeeds, some countries will suffer. Why is this?
Distinguish carefully between total and marginal utility and use this distinction to explain the paradox of value.
In what way does the law of diminishing marginal utility provide a justification for the use of progressive taxes?
What happens to hours of work when nonlabor income decreases? What happens to hours of work when the wage rate falls?
Why do welfare programs create work disincentives? Why does the earned income tax credit increase the labor force participation rate of targeted groups?
Suppose that the indifference curves between consumption and leisure are concave to the origin. How many hours will a person allocate to leisure activities?
What will happen to the worker's hours of work (defined as hours actually spent on the job) as a result of this increase in commuting costs?
How many additional dollars of income would it take to make a nonworker give up 10 hours of leisure time?
Nick and Jane are married. They currently reside in Minnesota. Nick's present value of lifetime earnings in his current employment. Should they move to Texas?
How will the allocation of resources be affected by technological advances which significantly reduce the cost of producing a particular good?
Construct a graph to show the original equilibrium level of income and the new equilibrium level of income after the fall in MPS.
The level of investment is 100. Why is 600 not an equilibrium level of income? What is the actual equilibrium level of income?
How does inflation affect the efficiency with which money fulfils its functions? Are the problems of inflation greater if the rate of inflation is variable?
What is the prediction made by the quantity theory of money? Why is it often difficult to distinguish be-tween cost push and demand pull inflation?
What is natural about the natural rate of unemployment? Does the existence of a natural rate of un-employment imply that government is powerless to influence?
Distinguish between demand-side and supply-side policies. How might supply-side policies affect economic growth and the balance of payments?
Suppose also that white workers do not like working alongside black workers. Does employee discrimination lead to complete segregation?