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Unformatted text preview: Macroeconomic Principles Economics 1101 Spring 2010 Homework Set 1: Solutions Name : TUiD : Section 1: Definition type questions. Each definition is worth 2 points. Section 2: Short answer questions. Each question is worth 20 points. Section 3: Graphical questions. Each question is worth 8 points. Plot by hand using pencil. 1 Definitions The definition questions are straight from the text. The only thing you will be graded over is whether you have put in the main point(s) across. In case you have any specific questions about this section let me know. 1. Economics : 2. Scarcity : 3. Microeconomics : 4. Macroeconomics : 5. Positive Economics : 6. Normative Economics : 7. Marginal Cost : 8. Marginal Benefit : 9. Opportunity Cost : 10. Equilibrium : 2 Short Answer Questions 1. Social Security: The Social Security Administration (SSA) imposes a penalty on early with- drawl. This forces a lot of people to postpone their retirement. Why does the SSA impose a penalty on early withdrwal and why do people respond by postponing retirement? There is no right answer to this: give me your best guess based on what you know about economics! The Social Security Administration was set up in the wake of the Great Depression in the 1930s, with the hope of providing a safety net for people when they got older. The government promised a certain minimum level of payment once the person retired. Everything was fine till we saw the prospects of a major problem:level of payment once the person retired....
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