爱尔兰宏观经济习题作业

a. What is the quantity of labour employed at the equilibrium wage rate? (1 mark)以均衡工资率雇佣的劳动力数量是多少？（1分）

均衡工资率是指当工资率等于需求和供给时，即当劳动供给线与劳动需求相交时的工资率。因此，劳动力数量为3670人。

The equilibrium wage rateis at the moment when the rate equates the demand and the supply, that is, when the line of Labour supply intersects with Labour demand. Therefore, the quantity of labour is 3670. 

 

b. If minimum wage laws are imposed at a wage rate of Wm, what would be the quantity of labour demanded? (1 mark)如果最低工资法以WM的工资率实施，那么所需的劳动力数量是多少？（1分）

如果最低工资法以高于均衡工资的WM工资率实施，则所需劳动力数量将为2200。

If minimum wage laws are imposed at a wage rate of Wm,which is higher than the equilibrium wage, the quantity of labour demanded will be 2200. 

 

c. How many people would become unemployed as a result of the minimum wage? (2 marks)有多少人会因为最低工资而失业？（2分）

4750-2200=2550

The minimum wage aims at alleviating income inequality. However, 2250 people would become unemployed as a result of the minimum wage. There are fewer jobs for the people in the market. The overall job market is harmed. The reason is that higher wage may lead to higher prices of the products. This will result in less demand of the products and less demand of the employees for production and services.最低工资旨在缓解收入不平等。然而，由于最低工资，2250人将失业。市场上人们的工作越来越少。就业市场整体受到损害。原因是工资上涨可能导致产品价格上涨。这将导致产品需求减少，员工对生产和服务的需求减少。

 

d. Of those who became unemployed, how many had a job and then lost that job as a result of the minimum wage? (2 marks)

3617-2200=1417

Of those who became unemployed, 1417 people had a job and then lost that job as a result of the minimum wage.Researchers have found that low-skilled workers are more likely to be the victims of the introduction of the minimum wage. This may be due to the fact that employers may fire away the employees who are more expensive then the merchandizes and services. 

 

e. Why may firms choose to pay their employees above equilibrium wages? (2 marks)

According to efficiency wage theory, efficiency wages are defined as the wages which are more than the market equilibrium. Firms choose to pay their employees above equilibrium wages to avoid shirking producing unqualified work, reduce the turnover rate of the employees, and attract productive, efficient and high-qualified employees. 

 

2) Research and development is an important element for a country’s continued growth and development. Some argue for extending patent protection, while others argue for limiting it. How may patents contribute to improved productivity and thus economic growth? How may patents contribute to decreased productivity, thus stifling economic growth? (3 marks)

 

Patent restrictions may seem to favour and protect the property of larger corporations. However, patents are very crucial to product advancement as well as economic growth. If there are no patents to protect the benefits of the inventors, no one will be willing to spend time and money to invent more advanced merchandizes. If the imitators can easily imitate the newly invented products, they can get the benefits as the inventors. This will compete the price down and lower the benefits of the inventors. The patent system, therefore, is to protect the benefits of the inventors and encourage invention. 

 

There is one drawback of the patent system. When an inventor has an improved product, he may not be willing to produce it to replace his existing product. It is because if he produces the new products, his existing product will be suppressed. He does not want to destroy the market now he has in order to introduce his new product. This will lead to decreased productivity and stifle economic growth. 

 

3) Suppose Singaporeans become thriftier, consuming a smaller percentage of their income and saving a larger percent. Assume that the government budget position remains unchanged. Consider the impact in the loanable market by answering the following questions.

a. Does the supply of or demand for loanable funds shift? Does it shift to the right or the left? (1 mark)

Yes, the supply of the loanable funds shifts. The supply of the loanable funds shifts to the right. Loanable funds are the amount of money available for borrowing. Singaporeans make an additional sum available at each interest rate since the national savings increase due to the increase in Singaporeans’ savings and the unchanged governmental budget position. The demand curve remains unchanged. There is a new equilibrium point.  The equilibrium quantity has risen while the equilibrium interest rate has fallen.

 

b. What is the impact on real interest rates as a result of part (a)? (1 mark)

The demand for and the supply of the loanable funds causes the fluctuation of the interest rate. Since the supply of the loanable funds is resulted from sources of bank credit, dishoarding, back savings and disinvestment. The real interest rates fall due to the higher bank savings. 

 

c. What happens to the demand for loanable funds as a result of the change in real interest rates? (1 mark)

The demand does not change for loanable funds as a result of the change in real interest rates.

 

d. What is likely to happen to economic growth as a result? (1 mark)

The economic growth will be slowed down as a result. However, according to the Classical explanation of the loanable funds market, as the interest rate falls, other people in the marketmay consume more. The increase in consumption of other people can compensate the demand offsetting the Singaporeans’ higher savings. Therefore, the aggregate demand does not change. 

 

4) President Trump has been advocating protectionist trade policies for the United States. Discuss the potential costs and benefits of applying a protectionist trade policy in a country by dramatically increasing tariffs (don’t forget to consider the long-run). Your discussion should be approximately half a page in length. Provide your answer below. (5 marks)

 

Trumps tries to limit trades between China and America by imposing tariffs on imported goods and urging businessmen to move their factories back to America. He believes that these policies can counteract the unfair trade with China for its low labour wage. To introduce fair competition and retain the power of America, trade with China must be limited. He encourages goods to be made in America. He thinks that, in this way, employment of the Americans are protected. His policy contrasts with the concept of free trade. 

 

He also limits the quotas for imported goods. When the quantity of imported goods decreases, the price of the goods increases. This not only increases the cost to the import traders, but only increases the financial burdens to the local Americans. The imported goods may be materials for further manufacturing in Americans. In this way, the local American industries may pay more for the raw materials for production of their American products. 

 

In the coming years, there will be rise in the US economic growth since large-scale tax cuts and significant investment in infrastructure have been introduced. Therefore, there will be rise in global economic growth. Some argued that the protectionist policies may lead to black swan events because of the sudden and non-consistent economic growth. Gain in producer surplus can be found in market share, profits and greater sales. The price is higher and the demand quantity is greater. 

 

Trump believes that trade is a zero-sum game. He is so afraid that if China’s economy is growing, US’s economy will be shrinking. This is why he increases the tax on imported goods. However, this will cause a financial burden for the poor families in America. They pay more but get less. When the Americans have to face high tariffs, job loss may be resulted due to the high merchandises’ price. Consumer surplus in the market decreases. There is a loss of total welfare because of the decrease in consumer surplus not made up for by the government tax revenue and the income in producer surplus. #p#分页标题#e#

 

Foreign producers are worse-off because they sell fewer products on the same price. 

A trade war may happen between the US and China because they are the biggest economies in the world. 

 

The principle of comparative advantage indicates that the profits made from free trade outweigh the losses since it provides more job opportunities. This is due to the fact that nations can provide goods of their main strengths. Nonetheless, Trump’s policies will result in deadweight loss. Finally, no one will get any benefits from the protectionist trade policies. His policies will detrimentally harm the poor Americans whom he means to help.