Problem Set 1
Econ 320 – 001, Spring 2008
Due date: February 11, 2008 at the beginning of class
There are 30 questions (25 multiple choice and 5 short answer) in this problem set. Submit your answers by
the beginning of the class on Mon. Feb. 11, 2008.
For the Multiple Choice section:
mark your answers (and submit) on an official UNC scantron sheet.
Make sure to fill in your name
your student ID number. You can pick up a scantron sheet at the
checkout counters of the Student Stores and campus snackbars.
For the Short Answer section:
please write out and submit on your own paper the answers to these
questions. You must show your work (calculations, derivations, reasoning) in order to receive full credit.
Make sure to print your name on the paper and sign the honor Pledge affirming that you have neither given
nor received unauthorized aid on this assignment and have complied with all of the rules of this assignment.
I. Multiple Choice
(5 pts) Macroeconomic models are used to explain how ______ variables influence _______
(5 pts) In a simple model of supply and demand for pizza, when the price of cheese increases, the
price of pizza ______ and the quantity purchased _____
(5 pts) When a firm sells a product out of inventory, GDP:
is not changed
increases or decreases, depending on the year the product was produced
(5 pts) Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its
workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the
value added by the automobile company is:
(5 pts) If GDP (measured in billions of current dollars) is $5,465 and consumption is $3,000 ,
investment is $1,200 , government purchases is $1,296, while exports equal $673, imports are: