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Problem Set #1 ANSWERS (Spring 2008) 1/5Name: _______________________ SID: _______________________ Discussion Section: _______________________Problem Set #1 ANSWERSDue Tuesday, February 12, 2008Problem Sets MUSTbe word-processed except for graphs and equations. QUESTIONSA.Multiple Choice Questions. Circle the letter corresponding to the bestanswer. (1 points each.) 1.Positive analysis of economic policy: a.Examines the economic consequences of policies but does not address the question of whether those consequences are desirable. b.Examines the economic consequences of policies and addresses the question of whether those consequences are desirable. c.Generates less agreement among economists than normative analysis. d.Is rare in questions of economic policy. 2.Because government services are not sold in markets: a.They are excluded from measurement of GDP. b.The government tries to estimate their market value and uses this to measure the government’s contribution to GDP. c.They are valued at their cost of production. d.Taxes are used to value their contribution. 3.An adverse supply shock would: 4.Which of the following events would lead to an increase in the marginal product of labor for every quantity of labor?
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