Wilson walks into his class 10 minutes late because he couldn’t find a place to park. Because of his tardiness, he doesn’t hear the professor tell the class there will be a quiz at the next session. At the next session, Wilson is unprepared for the quiz and ends up failing it. Might Wilson’s failing the quiz have anything to do with the price of parking? Explain your answer
> There is an appreciation in the country’s currency. The price level will _______________ and Real GDP will _______________.
> There is an increase in foreign real national income. The price level will _______________ and Real GDP will _______________.
> There is an increase in productivity. The price level will _______________ and Real GDP will _______________.
> There is an increase in interest rates. The price level will _______________ and Real GDP will _______________.
> What will happen if there is a decrease in the value of the U.S. dollar at the same time that there is a decrease in the prices of nonlabor inputs, and AD and SRAS shift by the same amounts? The price level will _______________ and Real GDP will ___
> Speculation (on prices) leads to gains for the speculator and losses for others. Do you agree or disagree? Explain your answer.
> What will happen if there is a decrease in interest rates at the same time that there is an increase in wage rates, and AD shifts by more than SRAS shifts? The price level will _______________ and Real GDP will _______________.
> There is an increase in foreign real national income. The price level will _______________ and Real GDP will _______________.
> There is an adverse supply shock. The price level will _______________ and Real GDP will _______________.
> There is a decrease in personal income taxes. The price level will _______________ and Real GDP will _______________.
> Consumers start to expect higher future prices. The price level will _______________ and Real GDP will _______________.
> There is a decrease in productivity. The price level will _______________ and Real GDP will _______________.
> Consumers start to expect lower future incomes. The price level will _______________ and Real GDP will _______________.
> There is a decrease in wage rates. The price level will _______________ and Real GDP will _______________.
> There is a decrease in wealth. The price level will _______________ and Real GDP will _______________.
> If the CPI is 150 and nominal income is $100,000, what does real income equal?
> Samantha is flying from San Diego, California, to Arlington, Texas, on a commercial airliner. She asks for an aisle seat but only middle-of-the-row seats are left. Why aren’t any aisle seats left?
> Assume the market basket contains 10X, 20Y, and 45Z. The current-year prices for goods X, Y, and Z are $1, $4, and $6, respectively. The base-year prices are $1, $3, and $5, respectively. What is the CPI in the current year?
> Using Exhibit 2, compute the percentage change in prices between (a) 1966 and 1969, (b) 1976 and 1986, and (c) 1990 and 1999.
> Based on the following data, compute (a) the unemployment rate, (b) the structural unemployment rate, and (c) the cyclical unemployment rate. The frictional unemployment = 2 percent, natural unemployment rate = 5 percent, civilian labor force = 100 milli
> What will happen if there is an increase in income and this is an inferior good and, at the same time, subsidies to producers rise, and demand and supply shift by equal amounts? The equilibrium price will _______________ and the equilibrium quantit
> What will happen if buyers expect the price of this good to rise in the future and, at the same time, there is an improvement in the technology used to produce this good, and demand shifts by less than supply shifts? The equilibrium price will ____
> There is an increase in the number of buyers of this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> There is a decrease in preferences for this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> There is a decrease in taxes on producers of this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> Sellers expect the price of this good to fall in the future: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> There is a decrease in the number of sellers of this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> What is the relationship between the probability of a person being admitted to the college of his choice and the tuition the college charges?
> There is a decrease in the price of a relevant resource used to produce this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> There is a decrease in income and this is a normal good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> The price of a substitute for this good increase: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> What will happen if there is an increase in the price of a complement to this good at the same time that there is an increase in government restrictions for producers of this good, and demand shifts by a larger amount than supply shifts? The equili
> What will happen if there is an increase in the number of buyers of this good at the same time that subsidies to producers of this good decrease, and demand and supply shift by equal amounts? The equilibrium price will _______________ and the equil
> The price of a substitute for this good decreases. The equilibrium price will _______________ and the equilibrium quantity will _______________.
> There is an increase in the price of a relevant resource used to produce this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> Buyers expect the price of this good to fall in the future: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> There is an increase in income and this is an inferior good: The equilibrium price will _____________ and the equilibrium quantity will__________.
> There is an increase in preferences for this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> Consider the theater in which a Broadway play is performed. If tickets for all seats are the same price (say, $70), what economic effect might arise?
> There is an increase in taxes on the production of this good: The equilibrium price will _______________ and the equilibrium quantity will _______.
> There is a decrease in government restrictions for producers of this good: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> Subsidies to producers of this good increase: The equilibrium price will _______________ and the equilibrium quantity will _______________.
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: Explain how to determine whether the law of increasing opportunity cost holds for paper towel production at Pi
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: Does the law of increasing opportunity costs hold for book production at Pinnacle Paper Products? How do you k
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: What is the pattern of opportunity costs as one chooses to move down this PPF from point A to B to C to D and
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: Continue moving point by point down the PPF. What is the pattern of gains as one chooses to move down this PPF
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: What is the opportunity cost of choosing to produce at point C, instead of at point B?
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: What is gained by choosing to produce at point C, instead of at point B?
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: What is the opportunity cost of choosing to produce at point B, instead of at point A?
> Pinnacle Paper Products Inc. can produce books or rolls of paper towels. Here is its PPF for the resources and technology it has available: What is gained by choosing to produce at point B, instead of at point A?
> Which of the following should be included in the U.S. GDP for 2013? Explain how they will be handled when computing GDP using the expenditure approach. Explain why they should or should not be included. 1. Property taxes paid in 2013 to the city of Anch
> Which of the following should be included in the U.S. GDP for 2013? Explain how they will be handled when computing GDP using the expenditure approach. Explain why they should or should not be included. 1. A federal courthouse built in Utah in 2013. 2.
> What is the difference between the discount rate and the federal funds rate?
> Suppose the Fed lowers the federal funds rate target. How will this action likely affect both the federal funds rate and the money supply?
> A person takes $4,000 and places it into a checking account in a bank. Does the composition of the money supply change? Does the size of the money supply change? Explain your answers.
> What does it mean to say that a bank is reserve deficient?
> What is the relationship between the required reserve ratio and the money supply? What is the relationship between the simple deposit multiplier and the money supply?
> The required reserve ratio is 10 percent, a bank has checkable deposits of $200 million and excess reserves of $100 million. Assuming the bank is meeting its reserve requirement, what amount is the bank holding in reserves?
> Money economies are likely to be richer than barter economies in both output and leisure. Do you agree or disagree? Explain your answer.
> Explain how lower lending standards and lower interest rates can lead to higher house prices.
> If checkable deposits are $100 million and the required reserve ratio is 7 percent, then what do required reserves equal?
> Explain how money emerged out of a barter economy.
> If $4 million is transferred from checkable deposits into money market mutual funds (retail), what happens to both M1 and M2?
> Give a numerical example to illustrate the difference between a progressive and proportional income tax structure. Taxable income Progressive tax rate Proportional tax rate 0-$10,000 10% 10% $10,001-$11,000 12% 10% $11,001-$12,000 14%
> Explain how, under certain conditions, expansionary fiscal policy can remove an economy from a recessionary gap. LRAS SRAS 2 AD2 AD, Real GDP
> Give a numerical example to illustrate the difference between the marginal tax rate and the average tax rate. Taxable income Tax payment $100 $10 $110 $12
> Tax cuts may either decrease or increase tax revenues. Do you agree or disagree? Explain your answer.
> Explain the difference between zero, incomplete, and complete crowding out. If crowding out is complete, does it call into question the effectiveness of a rise in government purchases in order to remove an economy from a recessionary gap? Explain and dia
> In the simple Keynesian model, an economy can be in equilibrium and in a recessionary gap too. Do you agree or disagree? Explain and diagrammatically represent your answer in terms of the AD-AS framework.
> Diagrammatically represent and explain the equilibrating process in the simple Keynesian model in the TE-TP framework.
> What is the difference between a price ceiling and a price floor? What effect is the same for both a price ceiling and a price floor?
> The shape of the aggregate supply curve matters to changes in the price level and Real GDP, given a change in aggregate demand. Do you agree or disagree with this statement? Explain your answer.
> Outline the differences between Keynes and the classical economists when it comes to; (a) Say’s Law in a money economy (b) Investment
> According to Keynesian economists, what is the explanation of why an economy may not be able to remove itself from a recessionary gap?
> Explain the classical view of the credit market. 1 $100,000 $120,000 Dollars Saved or Invested Interestrates 3.
> If the economy is in an inflationary gap, where is it located with respect to both the institutional PPF and the physical PPF? LRAS Physical PPF SRAS, Institutional PPF D AD. Real GDP Real GDP Good X Price Level All Oth er Goods
> Flexible wages play a critical role in removing an economy from a recessionary gap. Do you agree or disagree? Explain your answer.
> Explain and diagrammatically represent how a self-regulating economy removes itself from an inflationary gap.
> Explain and diagrammatically represent how a self-regulating economy removes itself from a recessionary gap.
> Explain what happens to U.S. net exports and to U.S. aggregate demand as the dollar depreciates.
> Explain and diagrammatically represent the difference between equilibrium in the short run and in the long run using the AD-SRAS-LRAS model.
> Buyers always prefer lower prices to higher prices. Do you agree or disagree with this statement? Explain your answer.
> How will either the AD curve or SRAS curve shift as a result of each of the following changes: a. A rise in the interest rate b. An adverse supply shock c. A rise in wealth Price Price Price SRAS, SRAS, -> AD2 AD, AD, AD, Real GDP (b) Real GDP (a)
> Suppose that business taxes and wage rates decline and that any change in aggregate demand is greater than any change in short-run aggregate supply. Explain and diagrammatically represent the changes in the price level and Real GDP in the short run.
> Explain how the real balance effect works? Price $170 $150 AD Q, Q: Real GDP
> A good that is produced but not sold is still counted in GDP using the expenditure approach to computing GDP. Do you agree or disagree with this statement? Explain your answer.
> Explain the expenditure approach to computing GDP.
> If country A’s GDP is higher than country B’s GDP, does it follow that country A has a higher per-capita GDP than country B? Why or why not?
> Why are the sales of used goods omitted from GDP?
> Give an example that illustrates double counting.
> Is the sum of the unemployment rate and the employment rate equal to 100 percent? Why or why not?
> Six million persons are unemployed, and 60 million persons are employed. If the natural unemployment rate is 5 percent, what does the cyclical unemployment rate equal?
> Explain why fewer exchanges are made when a disequilibrium price (below equilibrium price) exists than when the equilibrium price exists.
> What is the difference between a person who is frictionally unemployed and one who is structurally unemployed?
> If nominal income is $55,000 in the current year and the CPI in the current year is 120, then what does real income equal in the current year?
> The market basket consists of 10A and 20B. The prices of A and B in the current year are $2 and $4, respectively. The prices of A and B in the base year are $1 and $2.50, respectively. What is the current-year CPI?
> Freeway congestion (at certain times of the day) is the result of a disequilibrium price (below equilibrium price) being charged to drive on the freeway. Do you agree or disagree? Explain your answer. Price Dza.m. D7 a.m. S $1.25 500 800 Freeway mil
> Renters always are better off if they have more rather than fewer days to vacate the premises after receiving an eviction notice. Do you agree or disagree? Explain your answer. Rent S2(Law: 200 days) S:(Law: 10 days) R2 R Apartments
> The schools on the east side of town are considered better schools than the schools on the west side of town. Will this fact affect house prices on each side of town? Explain your answer.
> Two colleges, A and B, that have the same number of openings for the first-year class and charge the same tuition. At college A, the standards of admission are higher than at college B. Explain why. Tuition SAB DA No. of 200 290 420 Openings
