Question 1:
(a) Describe economic terms and concepts in question.
(b) Describe your reasoning leading from concepts in question to the final answer.
(c) Write full sentences and use double spacing between paragraphs.
(d) Place copied sentences in quotation marks and list source materials used to arrive at your answers.
(e) Edit your work for sentence structure, spelling and appropriate formatting of paragraphs.
The maximum score results if work reflects knowledge of relevant economic concepts.
Question 2:
What are the four supply factors of economic growth? What is the demand factor? What is the efficiency factor? Illustrate these factors in terms of the production possibilities curve.
Question 3:
What are the four phases of the business cycle? How long do business cycles last? Why does the business cycle affect output and employment in capital goods industries and consumer durable goods industries more severely than in industries producing consumer nondurables?
Question 4:
Suppose that disposable income, consumption, and saving in some country are $200 billion, $150 billion, and $50 billion, respectively. Next, assume that disposable income increases by $20 billion, consumption rises by $18 billion, and saving goes up by $2 billion. What is the economy's MPC? Its MPS? What was the APC before the increase in disposable income? After the increase?
Question 5:
Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown below.
|
Amount of Real GDP Demanded, Billions
|
Price Level
(Price Index)
|
Amount of Real GDP Supplied, Billions
|
|
$100
|
300
|
$450
|
|
200
|
250
|
400
|
|
300
|
200
|
300
|
|
400
|
150
|
200
|
|
500
|
100
|
100
|
a. Use the data above to graph the aggregate demand and aggregate supply curves. What is the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?
b. If the price level in this economy is 150, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount? If the price level is 250, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount?
c. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new aggregate demand curve as AD. What is the new equilibrium price level and level of real output?