Econ Quiz 11 - StudentzNirav Patel Instructor: Alpha Kaikai...

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Unformatted text preview: StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today lSe Updated Edition 1. Which of the following is a possible explanation for sticky prices? Labor contracts cause wages to be fixed over the contract period. It is illegal for firms to lower prices without the consent of the courts. All firms act as a cartel and maintain a constant non-competitive price. Lack of union power to lower prices on products allows firms to maintain higher priced goods. YOU ANSWERED: nothing 2, The Modern Keynesian short-run aggregate supply curve is best described by which of the following statements? It is very steep at low levels of real GDP; decreases slightly as real GDP grows; and becomes very flat as real GDP surpasses full employment. It is very steep at low levels of real GDP; decreases slightly as real GDP grows; and becomes horizontal at full employment. It is very flat at low levels of real GDP; increases slightly as real GDP grows; and becomes horizontal at full employment. It is very flat at low levels of real GDP; increases slightly as real GDP grows; and becomes very steep as real GDP surpasses full employment. YOU ANSWERED: nothing Page I StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 —10:00 Book: Miller: Economics Today 15e Updated Edition 3, Suppose that the economy is depicted in the graph to the right. 140 a. .The equilibrium price level and real GDP in 130 LRAS SRAS th1s economy are respectlvely: 120 $80 trillion; 10. 110 * 80; $10 trillion. T, 100 > 0) $80 trillion; $10 trillion. 5; 9° . . 5 80 $80; $10 trillion. 70 AD] b. Using the line drawing 1001, show a change in 60 aggregate demand that leads to an inflationary 50 AD gap. Label this new line 'ADI '. 0 2 4 6 81012141618 Note: if you are not prompted for a label, you Real GDP (39 trillions) have used the wrong drawing tool. E YOU ANSWERED: nothing 140 130 LRAS SRAS 120 1 1O _ 100 G) 6 3 90 .2 9‘ 80 7O 60 50 AD 40 0 2 4 6 8101214161820 Real GDP ($ trillions) Page 2 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today lSe Updated Edition 4. Suppose that the economy is depicted in the ra h to the ri ht. g p g LRAS SRAS Using the line drawing tool, show demand-pull inflation by correctly shifting aggregate demand. Label the new line 'ADl'. Note: ifyou are not prompted for a label, you have used the wrong drawing tool. E Price level AD Real GDP ($ trillions) LRAS SRAS Price level AD YOU ANSWERED: Real GDP ($ trillions) Page 3 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 —10:00 Book: Miller: Economics Today lSe Updated Edition 5. Suppose that the rental rate of machinery decreased temporarily. The result of this would be best described by: a decrease in the short run aggregate supply curve only. a decrease in both the short run aggregate supply and long run aggregate supply curves. an increase in the short run aggregate supply curve only. an increase in both the short run aggregate supply and long run aggregate supply curves. YOU ANSWERED: nothing 6_ Inflation in an economy implies that: the price of every good has increased. the average price level has increased over a stated period of time. that real GDP is overstated due to the higher price level. stores have increased their prices for no other reason than to earn more profit. Cost-push inflation arises due to: a decrease in the short run aggregate supply curve. an increase in the aggreate demand. a higher price level. an increase in the short run aggregate supply curve. Which of the following would create cost-push inflation? An increase in wages paid to workers. Increased training costs that produce a more than proportionate increase in worker productivity. Improved technology reducing transportation and shipping times. An increase in household income. YOU ANSWERED: nothing nothing nothing Page 4 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today lSe Updated Edition 7 , The long-run aggregate supply curve will not shift if there is a change in: amount of capital. amount of labor. 1"! the price level. technology. All of the following will shift the short run aggregate supply and the long run aggregate supply except for: a depletion of raw materials. increased training and education of the labor force. 7* a temporary change in input prices. decreased competition. YOU ANSWERED: nothing nothing Page 5 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today lSe Updated Edition 8, An economy is currently in a long run equilibrium where SRAS = LRAS = AD. Suppose that the US dollar depreciates, which of the following is the best explanation of the outcome? 7"! Aggregate demand increases. Aggregate demand, short run and long run aggregate supply all increase. Short run aggregate supply increases. Long run aggregate supply increases. Given that the economy is currently in a long run equilibrium where SRAS = LRAS = AD the US dollar depreciates the economy would then experience: 1' an inflationary gap. a depressionary gap. stagflation. a recessionary gap. YOU ANSWERED: nothing nothing Page 6 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today lSe Updated Edition 9, a. The Keynesian model argues that prices are sticky. One reason supporting this argument is that: government price ceilings all unemployment is voluntary nominal wages are flexible but real wages are not 7"? nominal wages are inflexible downwards b. Since the nominal wage is deemed inflexible a decrease in aggregate demand causes firms to increase wages to increase income so AD increases *3 reduce their workforce lower the real wage simply have all workers produce at a slower rate without any unemployment 0. Thus, according to the Keynesian model full employment is possible but not guaranteed ‘ YOU ANSWERED: nothing nothing nothing Page 7 Student: Nirav Patel Submitted: 11/24/10 5:19pm Instructor: Alpha Kaikai Course: CCBC ECON 201- MWF 9:05 -10:00 Assignment: Chapter 1 l-A Book: Miller: Economics Today lSe Updated Edition 10, a. One of the main conclusions of Say's Law was that: if people supply goods in order to then demand goods, there can be overproduction in a market economy and less than full employment Will be the normal state of affairs. if people demand goods in order to then supply goods, there can be no overproduction in a market economy and full employment will be the normal state of affairs. if people supply goods in order to then demand goods, there can be no overproduction in a market economy and full employment will be the normal state of affairs. if people demand goods in order to then supply goods, there can be overproduction in a market economy and less than full employment will be the normal state of affairs. b. Which of the following best exemplifies Say's Law? c. Say's Law fits best in the Classical Theory aggregate supply ‘ to determine the level of output Increases in labor eventually lead to smaller and smaller increases in output. The production of a $4000 plasma TV set creates demand for other goods and services valued at $4000. The more you consume the less additional satisifaction you obtain from the next unit of the good. A decrease in the price of a good leads to a larger amount of the good being purchased. V . . . . Since this philosophy placed great importance on V YOU ANSWERED: nothing nothing nothing nothing nothing Page 8 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today lSe Updated Edition 11. The macroeconomy is depicted by the graph to the right. 160 a. Suppose that AD has changed due to 140 LRAS higher taxes. SRAS Using the line drawing tool, draw this new line 120 and label it 'D 1'. _ 3 G.) 7) 100 Note: you are not prompted for a label, you have used the wrong drawing tool. E 80 b. The new short run equilibrium price level has 60 ‘ decreased ‘ and real GDP has ADI AD decreased . 0 2 4 6 81012141618 ‘ Real GDP ($ trillions) c. Thus, in the short run it is possible to produce below the full employment level of real GDP. d. The cost of producing below the full employment level of real GDP is . ‘ h1 gher unemployment . 160 LRAS 140 SRAS 120 T) 5 3 100 .2 cl: 80 60 AD 40 0 2 4 6 8101214161820 Dnnl {Inn I¢ +w€llinma\ Page 9 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today 156 Updated Edition 1 1 Keal UUI’ IFIIIIOHS) (cont) nothing nothing nothing nothing Page 10 Student: Nirav Patel Submitted: 11/24/10 5:19pm 12. Instructor: Alpha Kaikai -10:00 Assignment: Chapter 1 l-A Course: CCBC ECON 201- MWF 9:05 Book: Miller: Economics Today lSe Updated Edition Suppose that the relationship between the number of workers and real GDP is given by the table below and diagram to the right. Labor input per year Real GDP/yr (millions of workers) ($trillions) 120 14.00 93% 130 16.00 in 140 18.00 E. 150 20.00 g 160 22.00 170 24000 a. The equilibrium hourly wage is $4‘ and the equilibrium number of workers employed in this economy is 140‘ million. b. At this equilibrium in the labor market the real GDP is $ 18.00‘ trillion. c. If the hourly wage were to change to $7 per hour how many workers would unemployed? *3 60 million. 30 million. 110 million. It is impossible to tell. (1. Using the double arrow line drawing tool, indicate the amount of unemployment as the surplus in the labor market by drawing a double-arrow between the quantity demanded and the quantity supplied of labor at $7 per hour. Label the it 'unemployed.’ Note: if you are not promptedfor a label, you Page 1 l 0 100 110 D 120 130 140 150 160 170 Millions of workers 180 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 1 l-A Submitted: 11/24/10 5:19pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today lSe Updated Edition 12. have used the wrong drawing tool. E (cont) YOU ANSWERED: nothing nothing nothing nothing 1O 9 Hourly wage rate 01 1 D 0 100 110 120 130 140 150 160 170 180 190 Millions of workers Page 12 ...
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Econ Quiz 11 - StudentzNirav Patel Instructor: Alpha Kaikai...

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