# Answers+to+all+TRY+questions+mAcro - Answers to all Try...

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Answers to all “Try” Questions Macroeconomics as a Second Language Martha L. Olney Chapter 1: Economics Tools – Math and Graphing 1. Y = 350 + 0.3Y 0.7Y = 350 Y = 350/0.7 = 5,000 2. Rate of change = (110 – 100) /100 = 10/100 = 0.10 = 10 percent 3. Rate of change = (100 – 110) / 110 = -10 / 110 = -0.091 = -9.1 percent 4. The rise is negative and the run is positive if we are going from the left to the right. Slope = rise / run = -2 / 2 = -1. 5. Quantity demanded decreases as price increases, so this is a downward- sloping curve. Answers - 1

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6. Spending increases as wealth increases, but the increases in spending get smaller and smaller as wealth gets larger and larger, so this is a curve with a positive and decreasing slope. 7. As the number of workers increases, their marginal product first increases but then later decreases, so this is a curve that first increases and then decreases. Answers - 2
8. Income always equals aggregate spending, so this is a curve with a slope of 1. 9. When the unemployment rate is low, the inflation rate is high but when the unemployment rate is high, the inflation rate is low, so this is a downward-sloping curve. Answers - 3

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10. Quantity supplied increases as price increases, so this is an upward-sloping curve. 11. For a monopolist, as quantity increases, marginal revenue has a steeper negative slope than average revenue, so we need two curves, both with a negative slope. The marginal revenue curve will be steeper than the average revenue curve. Answers - 4
12. When the amount of butter produced is decreased from 2,000 to 1,900 units, the number of guns produced increases from 10 to 20 units. But when the amount of butter produced is decreased from 1,000 to 900 units, the number of guns produced increases from 80 to just 82, so this is a curve with a negative and increasing slope (convex to the origin). 13. Quantity supplied is 13 when price is 5. But when price is 8, quantity supplied is 19. This is an upward-sloping curve. Answers - 5

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14. When price is 5, quantity demanded is 40. But when price is 10, quantity demanded is 30. This is a downward-sloping curve. Answers - 6
Chapter 2: Production Possibilities Frontier, Economic Growth, and Gains From Trade 1. Opportunity cost of increasing gun production from 15,000 to 20,000 equals 30,000 pounds of butter. 2. Opportunity cost of increasing butter production from 65,000 to 75,000 pounds equals 5,000 guns. Answers - 7

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3. Answers - 8
Yes, these numbers illustrate the law of increasing opportunity cost. The opportunity cost of increasing rice production rises as the amount of rice that is being produced increases. And the opportunity cost of increasing corn production also rises as the amount of corn that is being produced increases. Answers - 9

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