Eco_1_problem_set_10 - in the future However when everyone...

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Eco 1 Spring 2008 Problem Set 10 This problem set is due during your recitation. 1) Which of the following are microeconomic questions, and which are macroeconomic? a. How will Mr. Marten’s tips change when a large manufacturing plant near his restaurant closes down? b. What will happen to spending by consumers when the economy enters a downturn? c. How will the price of oranges change when a late frost damages Florida’s orange groves? d. How will wages at a manufacturing plant change when its workforce is unionised? e. What is the relationship between a nation’s unemployment rate and its inflation rate? 2) When one person saves, that person’s wealth increases, meaning they can consume more
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Unformatted text preview: in the future. However when everyone saves, all of our incomes fall, and we must all consume less today. Explain this apparent contradiction. 3) Why might a college graduate enter the job market during a period of economic expansion, but enter grad school during a period of economic contraction? 4) “Actual production” is GDP plus household production. Would household production increase or decrease during an economic contraction? How about during an economic expansion? Would “actual” production fluctuate as much as, say, GDP over the business cycle?...
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