巴罗宏观经济学答案Chapter 9.docVIP

Chapter 9: Capital Utilization and Unemployment Answers to review questions, pg. 229 1. Machines are determined by the capital stock available during the period, and may be considered a “fixed” input; but the number of hours used is a “variable” input and can be adjusted according to current conditions. Thus, the actual capital input is the number of machines multiplied by the number of hours each is used. Equation 9.4 shows that the rate of return on capital ownership is not just a function of machines owned, but of the number of machine hours supplied. Since the rate of depreciation increases with the intensity of use, the rate of return to capital ownership can be reduced by using it too intensely. 2. a. An increase in R/P increases the value of each hour of capital supplied. b. If the effects of capacity utilization rates on depreciation were to increase, then the net rate of return would be reduced for all values of ?. 3. The unemployment rate is the number of unemployed/labor force. Since the labor force is weakly pro-cyclical, the numbers will underestimate the true unemployment rate as the economy approaches a trough of a recession (when labor force is smaller) and overestimate it during the initial stages of recovery. (See discussion of # 9 below.) 4. The major reason a worker may reject an offer of employment which is greater than their current income is that the offer is in the lower end of the distribution of expected offers. If they refuse, they must suffer the opportunity costs associated with the foregone wages, but in return, they might end up find a better offer that more than makes up for it. It is the tradeoff between these two opportunities that determines the reservation wage: the lowest acceptable offer. 5. Job separations may have a variety of causes including: - imperfect information: either the job or the employee mail fail to live up to the expectations based on the original evaluation. - circumstances of