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The poorest countries in the world have a per capita income of about $600 today. We can reasonably assume that it is nearly impossible to live on an income below half this level (below $300)
Economists have devised measures of how much consumers alter their purchases in response to price changes. These measures are called price controls. price floors.
Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2002 and 2003 from the preceding year. For each year, identify the variable that does not change. Explain in words why y
Your college plans to increase total enrollment next year by 5,000 students. The additional students will have the following demand schedule: [Refer the attachment, table2] Now add the old demand sche
What was the growth rate of real GDP between 1996 and 1997? f. Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain.
In a labor -hour, Home country can produce either 10 units of Wine or 4 units of Cloth. Foreign country can produce either 6 units of Cloth or 8 units of Wine. Home country is said to have:
Before EA started price discriminating, how much consumer surplus was the Type A demand getting from air travel to Honolulu? Type B? Why did the total surplus decline with price discrimination, even t
Assume that the consumption schedule for a private open economy is such that consumption C = 50 + 0.8 Y . Assume further that planned investment I g and net exports X n are independent of the level of
Why is investment spending unstable? How is it possible for investment spending to increase even in a period in which the real interest rate rises?
With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labo
Suppose that when the interest rate on loans is 16 percent, businesses find it unprofitable to invest in machinery and equipment. However, when the interest rate is 14 percent, $5 billion worth of inv
What would production at a point outside the production possibilities curve indicate? What must occur before the economy can attain such a level of production?
Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. The price of candy bars is $.75 and the price of peanuts is $1.50.
Would Natasha be willing to buy insurance to protect against the variable income associated with the new job? If so/how much would she be willing to pay for that insurance? (Hint: What is the risk pre
Suppose that, on the basis of a nation’s production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can
Richard is deciding whether to buy a state lottery ticket. Each ticket costs $1, and the probability of the following winning payoffs is given as follows: Probability Return .5 $0.00 2.5 $1.00 .2 $2.0
The City of Rochester is thinking of expanding its airport. The expansion will increase travelers' consumer surplus by $100 and airlines' producer surplus by $200, while costing taxpayers only $50. Ho
Draw the short-run tradeoff between inflation and unemployment. How might the Fed move the economy from one point on this curve to another?
The government spends $3 billion to buy police cars. Explain why aggregate demand might increase by more than $3 billion. Explain why aggregate demand might increase by less than $3 billion.
The business section of most major newspapers contains a table showing U.S. exchange rates. Find such a table and use it to answer the following questions. a. Does this table show nominal or real exch
Let’s consider the effects of inflation in an economy composed only of two people: Bob, a bean farmer, and Rita, a rice farmer. Bob and Rita both always consume equal amounts of rice and beans.
What happened to the elasticity of demand for American cars when the Japanese developed a strong auto industry? What happened to the elasticity of demand for American autoworkers? Explain.
What are the three categories into which the Bureau of Labor Statistics divides everyone? How does it compute the labor force, the unemployment rate, and the laborforce participation rate?
Using a diagram of the labor market, show the effect of an increase in the minimum wage on the wage paid to workers, the number of workers supplied, the number of workers demanded, and the amount of u
Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loana