Quiz 1 - Sam Fonseca Macroeconomics Quiz 1 1 a microeconomic b macroeconomic c microeconomic d microeconomic e macroeconomic 2 Assuming that

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Sam Fonseca 09/15/2010 Macroeconomics – Quiz 1 1. a) microeconomic b) macroeconomic c) microeconomic d) microeconomic e) macroeconomic 2. Assuming that general observation is correct, the economic objective more important to liberals is to make the jobs which do exist, more beneficial to the people holding those jobs, while the objective more important to conservatives is to get jobs for more people, even if the people collectively have to take a slight pay cut. This means that liberals care more about the short term economic effect of increasing income, instead of the long term economic effect of increasing unemployment. Common sense says that a minimum wage is a good thing as it means people will be paid at least as much as they need to live, however this increases expenses of the companies who pay them and forces them to cut jobs. Conservatives care more about the long term effects than the short term effects. While it may be unpopular to lower or remove the minimum wage because people assume it is meant to help big businesses instead of the workers, it will eventually lower the unemployment. However, the jobs created may not pay enough for workers to live off of. Neither side is right or wrong because both sides benefit and harm the economy in different ways. A person who's wages are increased because of the minimum wage would most likely say liberals are right, but at person who is now unemployed would most likely say conservatives are right. 3. No, having absolute advantage does not mean the U.S. could not benefit from trading with a developing country that has less productive ability. The developing country may have comparative advantage over the U.S. in regards to a certain product, meaning that they can produce that product at a lower opportunity cost. If the developing country specializes in that product, they would be able to produce it at a lower cost, even though they would not be able to produce it at the same quantity as the U.S. The U.S. could then reduce its production of that product, increase production of other goods, and then trade with the developing country for that product at a lower price. For example, the U.S. trades with countries such as India and China because they have a lower opportunity cost from lower wages so they can produce goods at a lower price. 4.
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This note was uploaded on 02/12/2012 for the course ECON 2301 taught by Professor Mcelroy during the Fall '09 term at University of Texas at Dallas, Richardson.

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Quiz 1 - Sam Fonseca Macroeconomics Quiz 1 1 a microeconomic b macroeconomic c microeconomic d microeconomic e macroeconomic 2 Assuming that

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