ECON 2H03 Lecture Notes - Lecture 2: Capital Outflow
Document Summary
Use scan sheet and bubble a if the statement is true and bubble b if the statement is false. Answer questions #1 - 2 on the basis of following labour market data for a given period in an economy. Labour force = l = e + u = 2400 thousand workers. Job-finding rate = f = 0. 54 fu = se. Higher job-separation rate due to the introduction of new technology will lead to higher unemployment rate. Number of workers losing jobs = number of workers finding jobs =129. 60 thousand. Answer questions #3-4 on the basis of the following: Consider the demand and supply functions of k in a small open economy. Assume that the economy"s supply function becomes k = 5r, but r* stays at 20. As a result, labour-income/gnp ratio will be 5000/7000. Cuts in payroll taxes will cause a rightward shift of the labour supply curve. Cuts in payroll taxes will have no effect on unemployment rate.
