Suppose an economy is characterized by the equations below. Price setting: $P=(1+m)(W / A)$ Wage setting: $W=A^e P^e(1-u)$ Using this: Solve for the unemployment rate if $P^e=P$ but $A^e$ does not necessarily equal $A$. what effects does $\left(A^e / A\right)$ have on the unemplovment rate.

Suppose that a fall in consumer spending causes a recession. a. Illustrate the immediate change in the economy using both an aggregate-supply/aggregate-demand diagram and a Phillips-curve diagram. On both graphs, label the initial long-run equilibrium as point A and the resulting short-run equilibrium as point B. What happens to inflation and unemployment in the short run? b. Now suppose that over time expected inflation changes in the same direction that actual inflation changes. What happens to the position of the short-run Phillips curve? After the recession is over, does the economy face a better or worse set of inflation–unemployment combinations?

The table shows the unemployment rates r in the United States for selected years from 1990 through 2004. The time t is measured in years, with $t=0$ corresponding to 1990.

$$\begin{array}{|c|c|} \hline \text { Time, } t & \text { Rate, } r \\ \hline 0 & 5.6 \\ 2 & 7.5 \\ 4 & 6.1 \\ 6 & 5.4 \\ \hline \end{array}$$

$$\begin{array}{|c|c|} \hline \text { Time, } t & \text { Rate, } r \\ \hline 8 & 4.5 \\ 10 & 4.0 \\ 12 & 5.8 \\ 14 & 5.5 \\ \hline \end{array}$$

What term in the model gives the average unemployment rate? What is the rate?

Suppose the natural rate of unemployment is $6$ percent. On one graph, draw two Phillips curves that describe the four situations listed here. Label the point that shows the position of the economy in case.

Actual inflation is $3$ percent, and expected inflation is $5$ percent.

Use the graph that models the unemployment rates from 1975-2000.

If this graph was modeled by a polynomial equation, what is the least degree the equation could have?

Vince Bremaldi earned $\$ 32.876$ last year. The state unemployment tax paid by his employer is $5.4 \%$ of the first $\$ 7.000$ earned in a year. How much SUTA tax must Vince's employer pay for him? How much FUTA tax must Vince's employer pay?

Lee Financial Services pays employees monthly. Payroll information is listed below for January 2016, the first month of Lee’s fiscal year. Assume that none of the employees exceeded any relevant wage base. Salaries $500,000 Federal income taxes to be withheld 100,000 Federal unemployment tax rate 0.60% State unemployment tax rate (after FUTA deduction) 5.40% Social Security tax rate 6.2% Medicare tax rate 1.45% Required: Prepare the appropriate journal entries to record salaries and wages expense and payroll tax expense for the January 2016 pay period.

Between 2000 and 2010, the Phillips curve for the U.S. unemployment rate u and the Consumer Price Index inflation rate I was $I(u)=45.4 u^{-1.54}-1$ where u and I are both percents. Find and interpret dI for each value of u and du. $u=8$ and $d u=-0.7$

Do liberals, moderates, and conservatives (LIBCON3) differ in their perception about the level of unemployment in the last year (UNEMPLOY: 1 = Much better, 2 = Somewhat better, 3 = Stayed about the same, 4 = Somewhat worse, 5 = Much worse)? Conduct a test to answer the question.

Discuss the following claim: "More efficient use of labour enables enterprises to manufacture more things with the same workforce and sell those goods at the same or even cheaper prices. Increases in worker productivity can thereby permanently lower the unemployment rate without contributing to inflation.

Payroll information taken from employee earnings records is given below. $$ \begin{matrix} & \mathrm{\scriptscriptstyle Accumulated} & \mathrm{\scriptscriptstyle Total \ Earnings \ for}\\\mathrm{\scriptscriptstyle Employee \ Name} & \mathrm{\scriptscriptstyle Earnings, \ April \ 30} & \mathrm{\scriptscriptstyle May \ 1–15 \ Pay \ Period}\\\mathrm{\scriptscriptstyle Beltran, \ Tamela \ C.} & \mathrm{\scriptscriptstyle $5,100.00} & \mathrm{\scriptscriptstyle $637.50}\\\mathrm{\scriptscriptstyle Cintron, \ Irma \ V.} & \mathrm{\scriptscriptstyle 7,350.00} & \mathrm{\scriptscriptstyle 920.00}\\\end{matrix} $$ Calculate the amount of earnings subject to unemployment taxes. Unemployment taxes are owed on the first $7,000.00 of earnings for each employee.

Suppose the natural rate of unemployment is $6$ percent. On one graph, draw two Phillips curves that describe the four situations listed here. Label the point that shows the position of the economy in case.

Actual inflation is $5$ percent, and expected inflation is $3$ percent.

During a recession, Congress decides to stimulate the economy by providing funds to hire unemployed workers for government projects. Suppose that $t$ months after the stimulus program begins, there are $N(t)$ thousand people unemployed, where

$$N(t)=-t^3+45 t^2+408 t+3,078$$

a. What is the maximum number of unemployed workers? When does the maximum level of unemployment occur?

b. In order to avoid overstimulating the economy (and inducing inflation), a decision is made to terminate the stimulus program as soon as the rate of unemployment begins to decline. When does this occur? At this time, how many people are unemployed?

Vince Bremaldi earned $\$ 32,876$ last year. The state unemployment tax paid by his employer is $5.4 \%$ of the first $\$ 7.000$ earned in a year. How much SUTA tax must Vince's employer pay for him? How much FUTA tax must Vince's employer pay?