KVann_Macro Final Exam_03172011

KVann_Macro Final Exam_03172011 - Katherine Vann Economics...

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Katherine Vann Economics Final 1 1. Assume that the price of gasoline will continue to escalate. Respond to the following scenarios: a. Explain shifts or movement along the curves of supply and/or demand curves. Unfortunately gas is one of the only ways that more than 90% of the population has to get around as a means of transportation. Most people are not going to ride a bike in a business suit. However, as gas prices continue to rise demand will begin to lessen (curve to the left). While demand for gas lessons the supply won’t necessarily follow, therefore it will continue to most likely stay consistent in production. This presents a shift in the curve for supply to the right. Just because people don’t want gas anymore doesn’t make it go away. b. Identify both positive and negative externalities associated with high gasoline prices. A positive externality of high gasoline prices is that of high amounts of fossil fuels being burned will lesson. A negative externality would be all of the lower end employees possibly losing their jobs due to the fact that the oil companies cannot afford to keep them on. c. Discuss how economic well-being may be compromised. Even after the crisis in Middle East is resolved gas prices will continue to rise. Even President Obama realizes that the continuing gas prices are causing a great deal of economic distress. Continuing the price heightening of gas … the wellness of our economy overall will continue to decline. Gas is a necessity; therefore if people can’t afford it other parts of the economy will suffer such as tourism. 2. As more immigrants enter into our country and become part of our U.S. workforce, answer the following questions: (Assuming they are LEGAL) a. How will unemployment be affected? Most immigrants come here looking for a new start. Therefore, they are usually willing to work for less (benefits, pay, etc) than American nationals are. As more immigrants come into the US more and more nationals will most likely be replaced with cheaper labor creating a higher unemployment rate. b. What will be the affects of outsourcing? Most Americans will lose their jobs giving us a higher local unemployment rate. When others are willing to work for less, most companies will go where the cheaper labor is … which usually in-house labor usually isn’t. c. Will poverty hit a record high? Explain. I feel that poverty will reach a record high because so many people will be out of a job. If the economy doesn’t create more jobs then the jobs that are out there go to the lowest bidder in more cases. More and more people are going to be jobless, which leads to indebtedness, which leads to other things such homelessness and an overall higher poverty level.
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KVann_Macro Final Exam_03172011 - Katherine Vann Economics...

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