Question 7 (1 Viewer)

runnable

Active Member
Joined
Aug 20, 2006
Messages
1,412
Gender
Male
HSC
2008
I believe its A. It was clear cut asking us to know that growth cannot increase employment at NAIRU.
 

runnable

Active Member
Joined
Aug 20, 2006
Messages
1,412
Gender
Male
HSC
2008
From Tim Dixon's book on NAIRU.

"Therefore, making the economy grow faster by increasing the level of demand through macro policies is futile once the NAIRU is reached. It will only lead to higher inflation."

Pretty sure it does not say NAIRU can go under through growth.
 

Garygaz

Active Member
Joined
Oct 25, 2007
Messages
1,827
Gender
Male
HSC
2008
Yea true, different books address it differently, it will be interesting to see what the BOS puts down for it.
 

runnable

Active Member
Joined
Aug 20, 2006
Messages
1,412
Gender
Male
HSC
2008
Guess you just lost your soul.

Because we only learn the NAIRU and the one golden rule of NAIRU is that it cannot be reduced through growth.
 

frieda

Premium Member
Joined
Mar 15, 2006
Messages
107
Location
inner-west
Gender
Female
HSC
2008
tau281290 said:
You know Long run phillips curve is not quite just phillips curve.

Its full name is Friedman-phelps Expecations Augmented Phillips curve which explains why what happens when AD is increased at NAIRU. Initial impact would be a decrease in U/E and increase in inflation, over the long term the U/E will return back to the NAIRU.

Go read ur econ text books if you don't get this. A is WRONG.
THANK YOU
 

runnable

Active Member
Joined
Aug 20, 2006
Messages
1,412
Gender
Male
HSC
2008
Lol novices. Come back when the answers come out yea?
 

aussie-boy

Member
Joined
Nov 13, 2006
Messages
610
Gender
Male
HSC
2008
yeah the C camp has much much more evidence than the A camp
its clearly C
 

Garygaz

Active Member
Joined
Oct 25, 2007
Messages
1,827
Gender
Male
HSC
2008
runnable said:
Guess you just lost your soul.

Because we only learn the NAIRU and the one golden rule of NAIRU is that it cannot be reduced through growth.
Actually after much deliberation, I've come to think you are right.

The long-run phillips curve is not taught under the HSC syllabus. At the end of Dixon's book, it says in appendix: b, where there is the information relating to this, that The analysis in this section is not required under the HSC Economics syllabus.

Hence, using only the HSC requirements on NAIRU and natural rate of employment, the basic analysis (and hence the one that is meant to be used in the HSC) is that the natural level of unemployment is unaffected by an increase in aggregate demand.
 

plak

New Member
Joined
Feb 27, 2007
Messages
26
Gender
Male
HSC
2008
And this is why Economics m/c is the hardest!. I put C lol. We'll know once the answers come out
 

whoisurdaddy

Member
Joined
Dec 5, 2007
Messages
256
Gender
Male
HSC
2008
runnable said:
Guess you just lost your soul.

Because we only learn the NAIRU and the one golden rule of NAIRU is that it cannot be reduced through growth.
Owwww....
 

shadyhaze

Member
Joined
Feb 3, 2007
Messages
36
Gender
Male
HSC
2008
think about the senario
at full employment, there is no cyclical unemployment
seasonal and frictional have no bearing
you cant just make ppl who lack skills (structural) do extra jobs
hardcore unemployed are unemployable

so if you increase growth, hence demand more from labour, at full employment aggregate labour demanded = aggregate labour suplied thus if you try to increase output through employing ppl without skills, hardcore what will happen? nothing, thus unemployment rate wont decrease

but at the same time increasing growth, gives incentive for ppl to work, reducing the discouraged workers, who then go and seek jobs, increasing the number of ppl who are actively seeking employment, hence increasing unemployment

thus answer is a
 

poisonives

coolest member
Joined
Oct 22, 2006
Messages
91
Location
Wahroonga
Gender
Female
HSC
2008
shadyhaze said:
think about the senario
at full employment, there is no cyclical unemployment
seasonal and frictional have no bearing
you cant just make ppl who lack skills (structural) do extra jobs
hardcore unemployed are unemployable

so if you increase growth, hence demand more from labour, at full employment aggregate labour demanded = aggregate labour suplied thus if you try to increase output through employing ppl without skills, hardcore what will happen? nothing, thus unemployment rate wont decrease

but at the same time increasing growth, gives incentive for ppl to work, reducing the discouraged workers, who then go and seek jobs, increasing the number of ppl who are actively seeking employment, hence increasing unemployment

thus answer is a
great post
 

Geohood

Member
Joined
Sep 1, 2007
Messages
61
Gender
Male
HSC
2008
The fact of the matter is... they shouldn't make us think that hard in MC!!!! :p
 

shakky15

Member
Joined
Nov 12, 2006
Messages
355
Gender
Male
HSC
2008
runnable said:
With Dixon's book.

Read up on Causes of Unemployment, Rising participation rates. Clearly states it.
your giving me the shits. stop telling us to 'read up'.

howabout YOU read up on page 171, the page you tell us to have a look at.

"Once the natural rate is reached, any further cuts in wages or stimulus to aggregate demand will not lead to permanent reductions in the rate of unemployment".

Tim Riley:

"thenatural rate of unemployment is also referred to as the NAIRU as it is at that level of unemployment in the labour market that remains if inflation is not increasing or accelerating in the economy".

ie - its not a concrete barrier that cannot be penetrated. its just that if unemployment DOES go under the NAIRU (and it CAN), the result is high inflation. also, its just for the short term as unemployment would quickly increase back above the NAIRU.

besides, howabout some common sense? our unemployment rate has been below the NAIRU for months now.

so i put (c).
 

shadyhaze

Member
Joined
Feb 3, 2007
Messages
36
Gender
Male
HSC
2008
read my post and tell my why a is wrong, and economics is theoretical remember tht
 

shakky15

Member
Joined
Nov 12, 2006
Messages
355
Gender
Male
HSC
2008
shadyhaze said:
think about the senario
at full employment, there is no cyclical unemployment
seasonal and frictional have no bearing
you cant just make ppl who lack skills (structural) do extra jobs
hardcore unemployed are unemployable

so if you increase growth, hence demand more from labour, at full employment aggregate labour demanded = aggregate labour suplied thus if you try to increase output through employing ppl without skills, hardcore what will happen? nothing, thus unemployment rate wont decrease

but at the same time increasing growth, gives incentive for ppl to work, reducing the discouraged workers, who then go and seek jobs, increasing the number of ppl who are actively seeking employment, hence increasing unemployment

thus answer is a
why doesnt seasonal unemployment have any beearing? im sure they can work in other jobs too. and i dont think hard core unemployment is coz they are unemployable (i could be wrong) i think its coz they are not desirable.

look, in all honesty i think there are arguments for both a and c.. id say the most correct answer is none of them as backcountrysnow suggested. unemployment shoouldnt change, and inflation would simply go up.

im just waiting for the answers to be published by the BOS now.
 

Users Who Are Viewing This Thread (Users: 0, Guests: 1)

Top