The exams contain 10 questions and you are required to answer all, it worth 100 points. You
have till Tuesday November 15th, 2016 at 3:30pm ET sharp to submit it. You can drop it at Prof.
Pattersons mail box at the economics department (NAC 4/120) or hard
77. Ifincomeincreasesby$10,000,governmentpurchasesarefixedat$1,000,investmentspending
isfixedat$2,000,netexportsarefixedat$500,andthemarginalpropensitytoconsumeis0.70,
byhowmuchdoesaggregateexpenditureincrease?
a. $700
b. $2,000
c. $7,000
d. $1,000
e. $1
ow to Calculate O ortunit Cost:
0 Select one alternative
0 Divide what you are losing by what you gain from
choosing that alternative.
. For example, if Nepal chooses to produce food,
the opportunity cost is:
m = 0.5
400
Nepal loses 0.5 tonnes of sh for e
PER UNIT Opportunity Cost
How much each marginal = Cost
unit costs
Example:
1'. The FER UNIT opportunity cost
ofmowoy frome tools. _
1 Erke
2. The PER UNIT oppommy
cost of moving from b to o is.
3!: Bikes
3. The PER UHlToppontuny
cost of moving from o to
Chapter 1
Slope: Rise(vertical)/Run (horizontal)
If the line has an direct relationship, we get a negative slope FALSE
If we keep the vertical distance the same, but increase the horizontal distance: The line gets less steeper
If the line has an inverse r
Chapter 8 Aggregate Expenditure and Equilibrium Output 1.Firms react to unplanned
inventory investment by reducing output. TRUE. 2.If actual investment is greater than planned
investment, inventories increase more than planned. TRUE. 3.Interest rates are