Name: ________________________________

INSTITUTE OF BUSINESS MANAGEMENT

COLLEGE OF BUSINESS MANAGEMENT

ECO 102A Principles of Macroeconomics

Assignment # 2 Due Date: On the day of 1
st
hourly

Solve the following questions from the book I sent you people in soft format i.e. 6
th
edition, Abel and Bernanke
(Macroeconomics).

1. From Page 104 and 105 solve all the Review Questions.
2. From Page 105 and 106 Solve Numerical Problem 3, 4, 5 and 9. (Hint: for numerical 4, first of all determine the
real wage i.e. divide nominal wage by price of output and then equate it with MPN which becomes the profit
maximizing condition of employment for the firm. Now, solve the given condition for N, which gives you the
number of labor that a firm demands at the given real wage in order to maximize profit. For question 5, first of
all find an equation for labor demand i.e. Make MPN equal to w and then re-arrange it for N, which becomes
the equation for labor demand. The equate labor demand with labor supply which is already given and solve it
for w which becomes the equilibrium real wage. Now put this w in any of the NS or ND and get the full
employment level of employment).

Note: The Assignment should be hand written on A4 paper.