EC112hw3 - EC112 Homework#3 Chapters 11 and 12 Name H Eskot...

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EC112 H. Eskot Homework #3 Spring 2008 Chapters 11 and 12 Name: __ _________________________________ Please answer all of the following questions directly into the space provided on this home assignment sheet and return your completed answer sheet in class on Monday April 7 th in class. Your answers do not have to be lengthy; however, they should be returned in class and not sent through e-mail. 1. Into which category of aggregate expenditures would each of the following transactions fall? a. A consumer in Japan orders a computer online from Dell. __Net Exports______________ b. Prudential Insurance Company purchases 250 new computers from Dell. _Investment_________________ c. The city of Waltham orders 150 machine guns from Smith and Wesson for its police department. __Investment___________________ 2. What is the macroeconomics consequence if firms accumulate large amounts of unplanned inventories at the beginning of a recession? It typically means that aggregated expenditures is less than the GDP. Because of the increase in inventory they have more than can be bought at that time so they will start producing less and the company will lay off a lot of people.
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