SUGGESTED HOMEWORK CHAPTERS 1-4
ANSWERS TO EXCERCISES
Venezuelas private property rights have been violated since the idea of
ownership has no meaning if the president can confiscate the land and give it to
whom he wants.
The nation pro
Suggested Homework Ch. 9, 11
A flow is a variable that is measured over a period of time. A stock is a quantity that has
accumulated over time. Stock: wealth, savings. Flow: income, saving, consumption,
government expenditures, net exports, G
ECN 201 - Suggested Homework Ch. 5-7
The value-added approach to calculating GDP can be used to compute the value of the
computer in the GDP. Because each intermediate step in manufacturing the computer is
listed by value added, we can simply
ANSWERS TO EXERCISES
Money is a medium of exchange, which means that money is used to carry out transactions.
I take dollars to the grocery store to buy food. Money is a unit of account, which means that
goods are valued in terms of money. I
1) The short-run tradeoffs between unemployment and inflation.
a. Phillips curve
i. 1958 AW Phillips fond a negative correlation between unemployment and inflation using
data from the UK.
ii. Paul Samuelson, Robert Solow found the same
ECN 201 Chapter 1
Economics is the study on how society manages its scarce resources.
Scarcity means that society has limited resources and therefore cannot produce all the goods and services that
Macroeconomics the study of the economy as a
Chapter 22 Cont.
1) The Phillips Curve and the role of expectations.
a. Short-run Phillips Curve represents the tradeoff between unemployment and
inflation when the expected rate of inflation = 2%
3) At point a,
a. Expected inflation = 2%
1) Monetary policy, Fiscal policy, and AD
a. Monetary policy Changes in the money supply.
i. The Federal Reserve System
1. Created in 1912 after a series of banking failures.
2. Fed system is broken into 12 districts each with its own F
Chapter 20 cont.
1) Aggregate Supply (AS) represents the total output in an economy at alternative price levels.
a. Short-run Aggregate Supply (AS)
i. Assume production costs are constant in the short-run.
b. Long-run Aggregate Supply (LRAS)
1) Aggregate Demand and Aggregate Supply
a. Aggregate Demand (AD) represents the total spending in an economy at alternative price
b. Aggregate Supply (AS) represents the total output of an economy at alterative price levels.
1) The Monetary System
a. Money Why do we need money?
i. 3 functions of money:
1. Medium of exchange money used as payment for goods and services.
a. To be an affective medium of exchange, money must be:
Chapter 4 Notes
1) Changes in quantity supplied vs. change and supply.
a. Change in quantity supplied
i. Is always a result of a change in the price of the product.
ii. Changes are shown as a movement along the supply curve.
b. Change in supply
Nominal GDP (current year P)(current year Q)
Real GDP (Base year price)(Current year Q)
Class Notes for Chapter 4
Supply and Demand
a. The law of demand The quantity demanded of a good or service rises when the price of the
good or service falls.
i. Ceteris paribus holding everything else constant or all else equal.
1) Problems with CPI
a. Substitution Bias Causes the CPI to overstate inflation.
Beginning of Market
5 Years Later
a. Calculated by the Bureau of Labor Statistics.
i. Unemployment rate is based on data collected by the Current Population Survey.
1. (of approximately 60,000 households)
a. Calculated every month:
i. Unemployment Rate
Notes for Chapter 6
Supply, demand, and Government policies
1) Price Control
a. Price Ceiling A legal maximum on the price at which a good can be sold.
i. To be binding (effective) the price ceiling must be below the equilibrium price.
ECN-201 Class Notes for chapter 2
1) Resources (Factors of production)
a. Inputs in the production process
i. Land all natural resources that are used in the production process.
1. Unaltered by human activity.
ii. Labor The physical and mental activities
Class Notes Chapter 10
1) GDP Gross Domestic Product
a. Measures 2 things at once:
i. Total income of everyone in the economy
ii. Total expenditure on the economys output of goods and services
b. How does it measure 2 things at once?
i. For econom
1) Interdependence and the gains from trade
a. Example: assume that there are only 2 goods in the world, meat and potatoes, and there are only
to people in the world, cattle rancher and potato farmer.
Hours needed to make 1 pound of:
December 1, 2012
Non-Price Competition Paper
Amazon: Non-Price Competition
Amazon.com, Inc. is a company stationed in Seattle, Washington (NY Times). It is an
internet marketplace where consumers can purchase goods at a lower price
Business Article #1
Walmart Has Decided To Drop the Kindle In Its stores
Walmart, a national retailer and a retail carrier of the Amazon Kindle, will be
discontinuing the sale of the Kindle after its current stock runs out. Walmart
BUS Article 3
Microsoft to Release New Tablet
The invention of the tablet and e-reader has sparked much competition amongst the big
companies. Joining the tablet arena, Microsoft now has a tablet that they are soon to reveal to the
Business Article 4
As a company, there are profits and losses. Both of them occur at different times
throughout a companys existence. Recently for Amazon, they experienced a loss in the third
quarter. Now realize, Amazon is not jus
Chapter 18 vocabulary
Finance: The function in a business that acquires funds for the firm and manages those
who fund within the firm.
Financial Management: The job of managing a firms resources so it can meet its goal