Chapter 4

# Chapter 4 - Determine whether the following topics should...

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Determine whether the following topics should be categorized as microeconomics or macroeconomics. 1.1. The effect of government spending on the unemployment rate is studied by a: A. Macroeconomist B. Microeconomist Macroeconomics is the study of economy-wide matters such as the unemployment rate. Therefore, the effect of government spending on the unemployment rate is studied by a macroeconomist. 1.2. A person's decision on which goods to buy with his or her income is studied by a: A. Macroeconomist B. Microeconomist Microeconomics is the study of how individuals and firms make decisions. Therefore, a person's decision on which goods to buy with his or her income is studied by a microeconomist. This table shows data on output (in billions of 1996 dollars) and population (in millions of people) for the United States during the years 1929-1935. 1929 1930 1931 1932 1933 1934 1935 Output (Billions of 1996 dollars) \$822.2 \$751.6 \$703.6 \$611.8 \$603.7 \$668.3 \$728.3 Population (Millions) 121.9 123.2 124.1 124.9 125.7 126.5 127.4 Source: Bureau of Economic Analysis 2.1. What was output per person in 1929? A. \$6,745 B. \$6.74 C. \$6.745 billion D. \$822.2 billion Output per person equals output divided by the total population: Output per person in 1929 = \$822,200,000,000 / 121,900,000 = \$6,745 2.2. Calculate output per person for 1930. \$ 6101 Correct Answer: Between \$ 6100 and \$ 6101 Output per person equals output divided by the total population: Output per Person in 1930 = \$751,600,000,000 / 123,200,000 = \$6,101 2.3. Place green points (triangle symbol) on the graph to plot output per person in the United States for the years 1929 through 1935. Line segments will automatically connect the points. Plot your points to the nearest hundred dollars. Note that the vertical axis is measured in thousands of dollars, so a value of \$6,745 should be plotted at 6.7 and a value of \$5,670 should be plotted at 5.7. To find output per person, divide output by the population. Note that output is expressed in billions of dollars and the population is expressed in millions of people. This table shows the values of output per person you should have plotted for each year.

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