Chapter 2
Comparative Advantage
Learning Objectives
1.
2.
3.
4.
Explain and apply the Principle of Comparative
Advantage
Explain and apply the Principle of Increasing
Opportunity Cost (also called the
Econ 126 - Problem Set 1 - Solution
January 22, 2015
Question 1
See excel spreadsheet for computations. All employment numbers are in thousands.
b) Employment 1989 : 117281
Employment 2007 : 146050
Me
Econ 126 - Problem Set 6 - Solution
March 27, 2015
Question 1
a) The equation stating the evolution of capital is
Kt+1 = (1 )Kt + sF (Kt , Nt ).
At the steady state Kt+1 = Kt Kss so
Kss = (1 )Kss + sF
Econ 126 - Problem Set 6 - Solution
February 23, 2015
Question 1
a) The following table compares the models prediction with the observed data. See spreadsheet for
calculations
Year
Model
Observed
Mo
Econ 126 - Problem Set 4 - Solution
May 4, 2015
Question 1
The AD curve is defined as the set of (Y, P ) points that are a solution to the following equation set for some
value of i,
Y = C(Y T ) + I(Y
Econ 126 - Problem Set 3 - Solution
February 5, 2015
Question 1
a) The set of equations is
IS: Y = C (Y T ) + I (Y, i) + G,
M
LM:
= Y L (i) ,
P
Interest Rule (IR): i = h (Y ) .
Taking total derivative
Econ 126 - Problem Set 8 - Solution
April 7, 2015
Question 1
For each year the growth rate of technology is given by
gAt =
1
(gY t t gKt (1 t )gN t )
1 t
where gY t = log(Yt ) log(Yt1 ), gKt = log(Kt
Econ 126 - Problem Set 10 - Solution
April 13, 2015
Question 1
a) While we typically refer to the changes in productivity we measure using growth accounting as technological change we do not actually
Econ 126 - Problem Set 5 - Solution
May 4, 2015
Question 1
a) Since in the medium run Y = Yn , which is set by
1 = (1 + m)F
1
Yn
,z ,
N
and since there are no changes in this equation in response to a
Chapter 13
Aggregate Demand,
Aggregate Supply, and
Business Cycles
Learning Objectives
1.
2.
3.
4.
Define the aggregate demand curve, explain why
it slopes downward, and explain why it shifts
Define t
Chapter 7
Economic Growth
Learning Objectives
1.
2.
3.
4.
5.
6.
Show how small differences in growth rates can lead to
large differences in living standards
Explain why GDP per capita is the product o
Chapter 1
Thinking Like an Economist
Learning Objectives
1.
2.
3.
4.
Explain and apply the Scarcity Principle
Explain and apply the Cost-Benefit
Principle
Discuss three important pitfalls that occur
w
Chapter 3
Supply and Demand
Learning Objectives
1.
2.
3.
4.
Describe how the demand and supply curves
summarize the behavior of buyers and sellers in
the marketplace.
Discuss how the supply and demand
Chapter 4
Spending, Income, and GDP
Learning Objectives
1.
2.
3.
4.
Explain how economists define and measure an
economy's output
Apply the expenditure method for measuring
GDP to analyze economic act
Chapter 5
Inflation and the Price Level
Learning Objectives
1.
2.
3.
4.
5.
Explain how the consumer price index (CPI) is
constructed and use it to calculate the inflation rate
Show how the CPI is used
Chapter 6
Wages and Unemployment
Learning Objectives
1.
2.
3.
4.
5.
Discuss the four important trends that have
characterized labor markets in the U.S. since 1960
Apply a supply and demand model to un
Chapter 9
Money, Prices, and the
Financial System
Learning Objectives
1.
2.
3.
4.
5.
6.
Describe the role of financial intermediaries such as
commercial banks in the financial system
Differentiate bet
Chapter 8
Saving, Capital Formation, and
Financial Markets
Learning Objectives
1.
2.
3.
4.
5.
Explain the relationship between savings and
wealth
Identify and apply the components of national
saving
D
Chapter 12
Monetary Policy and the
Federal Reserve
Learning Objectives
1.
2.
3.
4.
Describe the structure and responsibilities of the
Federal Reserve System
Analyze how changes in the federal funds ra
Chapter 11
Spending, Output, and Fiscal
Policy
Learning Objectives
1.
2.
3.
4.
Identify the key assumptions of the basic Keynesian model
and explain how this affects the production decisions made
by f
Econ 126 - Problem Set 9 - Solution
April 9, 2015
Question 1
a) Substituting the production function into the budget constraint and the budget constraint into the
objective function, as well as the ut