Macroeconomics Assignment 04: Labor Market and Technological Shocks

This macroeconomics assignment analyzes key macroeconomic concepts, including GDP, unemployment, and inflation, providing definitions and examples. It examines the relationship between labor and output, discussing the law of diminishing returns and the impact of technological shocks on the labor and output markets. The assignment also explores the effects of adverse technological shocks and the role of government in fostering technological development, including financing private sector innovation and supporting advancements through various policies such as tax credits, patents, and educational initiatives.

RUNNING HEAD: MACROECONOMICS
C11E
MACROECONOMICS
ASSIGNMENT 04

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Part A:
Answer 1. Macro-Economic analysis generally focuses on the three concepts:
 National income measured by GDP (Gross Domestic Product)
 Unemployment
 Inflation
National income (GDP)
The most vital idea of macroeconomics, alludes to the aggregate sum of merchandise and
ventures a nation produces, usually known as the total national output. The figure resembles a
depiction of the economy at one point in time. When alluding to GDP, macroeconomists tend to
utilize genuine GDP, which considers, rather than ostensible GDP, which reflects just changes in
costs. The apparent GDP figure will be higher if swelling goes up from year to year, so it isn't
really demonstrative of higher yield levels, just of higher costs.
For example: At the point when GDP decreases for two back to back quarters or more, by
definition, the economy is in a retreat. In the interim, when GDP develops too rapidly and fears
of expansion emerge, the Federal Reserve frequently endeavors to fortify the economy by raising
loan costs. (Weidman, T, 2015)
Unemployment
The unemployment tells macroeconomists what number of individuals from the accessible pool
of work (the work drive) can't look for some kind of employment.

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For instance Macroeconomists have come to concur that when the economy has seen
development from period to period, which is shown in the GDP development rate, joblessness
levels have a tendency to be low. This is on account of with rising (genuine) GDP levels, we
realize that yield is higher, and, subsequently, more workers are expected to stay aware of the
more prominent levels of generation.
Inflation
The third fundamental factor that macroeconomists take a gander at is the swelling rate, or the
rate at which costs rise. Expansion is fundamentally measured in two courses: through the
Consumer Price Index (CPI) and the GDP deflator. The CPI gives the present cost of a chose
wicker container of products and enterprises that is refreshed occasionally. The GDP deflator is
the proportion of ostensible GDP to genuine GDP. For example: In the event that apparent GDP
is higher than real GDP, we can expect that the costs of merchandise and ventures have been
rising. Both the CPI and GDP deflator tend to move a similar way and contrast by under 1%.
(Green, R., 2016)
Answer 2. I would expect that the quantity of yards that can be kept up in a day will go up, at
that point down as you achieve the cutoff of capital allotment (mowers and leaf blowers and so
on.). There are various factors in deciding the quantity of work area that can be kept up,
however, the inquiry requests that we take a gander at just two. For whatever length of time that
there is equipment for workers, extra representatives add to efficiency. When all gear is
appointed, extra workers are superfluous and there is no proficiency to be picked up.
(Tietenberg, T, 2016)

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 Another responsive fact can be as each extra laborer would create fewer yields. This is on
the grounds that if all the equipment are being utilized, the new representatives would
need to utilize their hands. Predicting that they will be getting leaves by hand. Obviously,
these specialists would not be exceptionally beneficial. (Cahuc, P., 2014)
The law of diminishing return can be used here as it states that alluded to as the law of lessening
minor returns, expresses that in a generation procedure, as one info variable is expanded, there
will be a time when the peripheral per unit yield will begin to diminish, holding every single
other factor steady. As it were, keeping every other factor steady, the extra yield picked up by
another unit increment of the information variable will in the end be littler than the extra yield
picked up by the past increment in input variable. By then, the reducing peripheral returns
produce results.
Part B:
Answer 1. The first effect of an adverse technological shock on the labor market and on the
output market is found that work efficiency responds definitely to work request shock and
adversely to work supply shock. This confirmation is predictable with the genuine business
hypothesis. Our model predicts that mechanical stuns create a positive restrictive relationship
amongst work and profitability (Galí, J., 2015)
Another effect of an adverse technological shock on the labor market and on the output market is
as the market of the laborers has been portrayed by an unfavorable move in labor request. One
clarification of this move is the deceleration in the development rate of mechanical advance, as it
is appeared by the advancement of TFP. Moving far from gifted work, firms prompted a
lessening in the development rate of innovative advance with a further negative effect on

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efficiency. We utilize a work advertise the show with shifts in labor free market activity to
investigate this elucidation. We make two primary suppositions. As in the real business model,
as in the indisputable plan of action, we accept that the rate of mechanical advance influences
works profitability and capital force in the unfaltering state. Besides we expect that the harmony
in labor advertise is influenced by foundations and by changes in establishments. (Borio, C.,
2014)
Answer 2. Governments have long tried to finance mechanical development, as a method for
enhancing the way of life of every one of its nationals. Financing private part innovation, by
ensuring the exertion through duty credits and patent assurance, gives motivating forces to new
items and administrations to be conveyed to advertise. (Antonelli, C, 2014)
Secondly, supporting advancement (better approaches for accomplishing something that builds
efficiency) takes into account bigger increments in mechanical advance. Government impose
credits, licenses, licenses to help the entrepreneurial exertion (ensuring the interest for the new
procedure) are for the most part methods that can goad advancement.
Moreover, the technological progress can be increased through helping students set off for
college, particularly to engineer and through encouraging the multinational organizations to find
branches in the state. (Bergstrom, J. C., 2016)

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References
Kubiszewski, I., Costanza, R., Franco, C., Lawn, P., Talberth, J., Jackson, T., & Aylmer, C.
(2013). Beyond GDP: Measuring and achieving global genuine progress. Ecological
Economics, 93, 57-68.
Wiedmann, T. O., Schandl, H., Lenzen, M., Moran, D., Suh, S., West, J., & Kanemoto, K.
(2015). The material footprint of nations. Proceedings of the National Academy of
Sciences, 112(20), 6271-6276.
Mankiw, N. G. (2014). Principles of macroeconomics. Cengage Learning.
Green, R. (2016). Classical theories of money, output, and inflation: a study in historical
economics. Springer.
Mattick, P. (2017). Economics, Politics and the Age of Inflation. Routledge.
Tietenberg, T. H., & Lewis, L. (2016). Environmental and natural resource economics.
Routledge.
Cahuc, P., Carcillo, S., & Zylberberg, A. (2014). Labor economics. MIT press.
Galí, J. (2015). Monetary policy, inflation, and the business cycle: an introduction to the new
Keynesian framework and its applications. Princeton University Press.
Borio, C. (2014). The financial cycle and macroeconomics: What have we learned?. Journal of
Banking & Finance, 45, 182-198.

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Antonelli, C. (2014). The economics of innovation, new technologies, and structural change.
Routledge.
Bergstrom, J. C., & Randall, A. (2016). Resource economics: an economic approach to natural
resource and environmental policy. Edward Elgar Publishing.