Problem Set_3 Macro 2008 Answers

Problem Set_3 Macro 2008 Answers - Economics 201:...

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Economics 201: Principles of Macroeconomics Amjad Toukan Spring 2008 Due at the start of lecture on February 18/19 PROBLEM SET 3 Answers 1 Textbook Exercises (1) Chapter 25, Problems 1, 2, 3, 4, 6, 7, 8, 9, 10 1. The facts that countries import many goods and services yet must produce a large quantity of goods and services themselves to enjoy a high standard of living are reconciled by noting that there are substantial gains from trade. In order to be able to afford to purchase goods from other countries, an economy must generate income. By producing many goods and services, then trading them for goods and services produced in other countries, a nation maximizes its standard of living. 2. a. More investment would lead to faster economic growth in the short run. b. The change would benefit many people in society who would have higher incomes as the result of faster economic growth. However, there might be a transition period in which workers and owners in consumption-good industries would get lower incomes, and workers and owners in investment-good industries would get higher incomes. In addition,
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This note was uploaded on 04/02/2008 for the course ECON 201 taught by Professor Toukan during the Spring '08 term at Chapman University .

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Problem Set_3 Macro 2008 Answers - Economics 201:...

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