Reference no: EM132600916

1. New government regulations put a maximum limit on the number of hours a person can work and make it more difficult for firms to fire workers. As a consequence of this policy, workers now become more likely to shirk. Explain how it impacts the input components of the production function and the TFP ( total factor productivity). Overall, what is the contribution on GDP?

2. Describe the likely consequences of the following for the participation rate (i.e. does it increase, decrease or remains the same). In each case provide a brief explanation.

(i) A new online platform that allows video gamers to live stream their video game play and earn income from selling advertising at the same time is developed.

(ii) CMU and other universities launch flexible online learning technologies that allow people to earn a degree by taking classes in evenings and at the weekend.

(iii) A new "home robot" is invented: it can look after the children, feed the dog, and clean the house.

3."If more people begin to use bitcoin, then consumers will use less cash and, absent other changes, the price level will most likely fall." Is this statement true or false? Explain using a model of the supply and demand for money. Draw a diagram to back up your answer.

4. Mr. Y is thinking about retirement, and decides to save an amount S to finance his future consumption. Mr. Y reads the newspaper, and he comes to the conclusion that inflation will be higher than he had previously anticipated. Mr. Y goes to the local bank to check whether the nominal interest rate i offered has changed, but he finds that the bank has made no changes to the interest rate offered on savings accounts. In light of this information, do you think that Mr.Y will change his savings S? Please explain your reasoning.