How Would Each of the Following Events Affect the Level

question 68

Essay

How would each of the following events affect the level of employment and the real wage rate?
(a)A tremendous boom occurs in the stock market,increasing people's wealth by $100 billion overnight.
(b)A major government loan-guarantee program goes bust,losing $500 billion.To pay off the loss,the government announces that tax rates will rise 30% in the future.
(c)A nuclear mishap contaminates all auto plants in the Detroit area,destroying their capital.
(d)Medical science cures the common cold,causing fewer work days lost due to illness,thus greatly increasing labor productivity.

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Definitions:

Corporate Strategy

The overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals.

Investor Relations Professionals

Specialists who manage communication between a company's corporate management and its investors, aiming to provide a true representation of the company's financial health and prospects.

Common Stock

A type of equity security that represents ownership in a corporation, with holders often having voting rights on corporate matters.

Investor Relations

The management of communication and relationship between a company and its investors, aiming to provide current and potential investors with an accurate account of company affairs.