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# 1. Economics is best defined as the study of (Points 5)

### Customer Question

1. Economics is best defined as the study of: (Points: 5)
financial decision-making
choices made by people faced with scarcity
inflation, unemployment, and economic growth

2. That which we forgo, or give up, when we make a choice or a decision is known as: (Points: 5)
equity
causation
correlation
opportunity cost

3. The slope of a straight line (Points: 5)
is always positive
must first increase then decrease
is not constant
is constant

4. Assume a society can produce either apples or bananas. If the marginal rate of transformation of apples into bananas is 0.2, then the opportunity cost of bananas is (Points: 5)
the five apples that must be forgone
the five bananas that must be forgone
the 0.2 apples that must be forgone
the additional 0.2 apples that can be produced

5. Economic growth will most likely occur when (Points: 5)
a society acquires new resources
a society decides to produce less using existing resources
the society begins to produce the combination of goods society wants most
technology remains unchanged but unemployment increases

6.

A decrease in quantity demanded is represented by movement:

(Points: 5)
from D2 to D1
from D2 to D3
along D2 from Point B to point A
along D2 from Point B to point C

7. The market will be in equilibrium if __________ is set __________ the equilibrium price (Points: 5)
a price floor; below
a price ceiling; below
actual price; above
actual price; below

8. The government imposes a maximum price on apartments that is BELOW the equilibrium price. You accurately predict that (Points: 5)
the law will have no economic impact
the law will create a surplus of apartments
renters will find that landlords start offering to furnish the apartments
landlords are less likely to do routine maintenance work in the apartments

9.
The market is initially in equilibrium at Point A. If demand shifts from D1 to D2, the equilibrium price will change from ________ and the equilibrium quantity will change from ________.

(Points: 5)
\$4.00 to \$3.00; 250 to 350
\$4.00 to \$3.00; 350 to 250
\$3.00 to \$4.00; 250 to 350
\$3.00 to \$4.00; 350 to 250

10.
The market is initially in equilibrium at Point B. If demand shifts from D2 to D1, the equilibrium price will change from ________ and the equilibrium quantity will change from ________.

(Points: 5)
\$4.00 to \$3.00; 250 to 350
\$4.00 to \$3.00; 350 to 250
\$3.00 to \$4.00; 250 to 350
\$3.00 to \$4.00; 350 to 25

11. The unemployment rate equals (Points: 5)
labor force/population
unemployed/employed
(employed - unemployed)/labor force
(labor force - employed)/labor force

12. expenditure approach to GDP is shown by which of the following equations? (Points: 5)
GDP = C + I + G + EX + IM
GDP = C + I + G + (IM - EX)
GDP = C + I + G + EX - IM
GDP = C + I + G - EX - IM

13. A company produced 12 motorcycles in 2006. The company sold 8 in 2006 and added 4 to its inventories. The market value of the motorcycles in 2006 was \$1000 per unit. What is the value of this company's output that will be included in the 2006 GDP? (Points: 5)
\$4000
\$8000
\$12,000
16,000

14. If personal saving is -\$40 billion and disposable personal income is \$430 billion, then personal consumption spending is (Points: 5)
\$40 billion
\$390 billion
\$410 billion
\$470 billion

15. GDP understates the value of output produced by an economy because it (Points: 5)
includes environmental degradation caused by increased output production
excludes value added from the underground economy, such as tips taken "under the table"
includes transactions that do not take place in organized markets, such as home-cooked meals
excludes the value of the wages and fringe benefits of government employees

16. The unemployment rate is calculated as (Points: 5)
(employed - labor force)/employed × 100
(employed - unemployed)/labor force × 100
unemployed/population × 100
(labor force - employed)/labor force × 100

17. the number of people classified as unemployed is 20,000 and the number of people classified as employed is 400,000, what is the unemployment rate? (Points: 5)
4%
4.7%
5%
8%
8.6%

18. The consumer price index is the index most often used to measure (Points: 5)
unemployment.
per capita income
inflation
the labor force

19. Which of the following statements is true? (Points: 5)
An individual living on a fixed income is always made better off as a result of deflation
Those individuals receiving welfare benefits have been harmed by inflation because increases in welfare payments have not kept pace with inflation
Inflation will have no effect on an individual whose income is indexed to the inflation rate
Everyone in society benefits from inflation

20. Using the saving/investment approach, when C + I = C + S (Points: 5)
saving = zero
saving = income
income = consumption
the market is in equilibrium

21. Describe the phases of the business cycle and the problems associated with its contractionary and expansionary phases. (Points: 20)

22. Explain society's tradeoff between unemployment and inflation. (Points: 20)

23. Describe in words how one would graph supply and demand in a single graph and explain the process by which a good's equilibrium price and quantity are determined by that graph (Points: 20)

24. Define "Gross domestic Product" and describe two ways in which it can be calculated. (Points: 20)

25. Differentiate between Nominal GDP and Real GDP. (Points: 20)

Aggregate output/income     consumption                    planned investment
2000           &nb sp;                                     2100                    300
2500   &nbs p;                                             2500                     300
3000    ;                                              2900                     300
4000                             &nb sp;                   3700                     300
4500                     4100                     300
5000                     4500                     300
5500                     4900                     300

A.     At each level of output calculate savings. At each level of output, calculate unplanned investment (inventory change). What is likely to happen to aggregate output if the economy produces at each levels indicated? What is the equilibrium level of output
B.     Over each range of invome (2000-2500, 2500-3000, and so on), calculate the marginal propensity to consume. Calculate the marginal propensity to save. What is the myltiplier?
C.     By assuming there is no change in the level of the MPC and MPS and planned investment jumps by 200 and is sustained at that higher level, re compute the table. What is the new equilibrium level of Y? Is this consistent with what you compute using the multiplier.
Submitted: 8 years ago.
Category: Homework
Expert:  Falak Naz replied 8 years ago.