1. What has happened to the size of international trade (relative to US GDP) since the late 1920's? With
what countries or regions does the United States trade the most?
1. Why is the financial sector important in macroeconomic debates? Why are macroeconomists concerned
with the total amount of flows coming out of and returning to spending?
The financial sec
1. The table below is a production possibility table for the fictional country of Myopia. Use it to construct
the corresponding production possibility curve in the quadrant below
1. Why is it that a technically efficient method of producing may not be an economically efficient method
Technical efficiency describes a production process that produces the gre
1. Why do economists worry more about the collapse of the financial sector than other sectors?
Economists worry about the financial sector not because its big, but because all
1. Who wins and who loses when there is an unexpected inflation? Explain and give two examples one
dealing with wages and other dealing with interest rates.
When there is unexpected inflation,
1. What is a Lorenz curve? What does it mean if the gap between a Lorenz curve and the diagonal line
gets smaller over time?
A Lorenz curve is a geometric representation of the share dis
1. How does the balance of payments differ from the balance on goods and services? How do these
balances relate to the international supply and demand for a nation's currency?
The balance of pa
1. In the multiplier model all expenditures are classified as one of two types. Explain and give an example
of each type of expenditure.
The two categories of aggregate expenditures are autonomous expend
1. How does monetary policy work in the context of the AS/AD model?
In the AD/AS model, monetary policy works primarily through its effect on interest rates. As the Fed
changes the monetary base, the interes
1. What is economic growth and how does it relate to living standards?
Economic growth is an increase in the amount of goods and services an economy produces. Alternatively
1. What is the difference between a negative and a positive externality? Give an example of each.
A negative externality occurs when decision makers fail to take into account the detrim
1. As newly elected President of your school's Economics Club, you must prepare the Club's annual
budget of $5,000. Past budgets have included: 1) fees for guest speakers, 2) tours of local businesses;
1. What is meant by GDP? What are the four expenditure components of GDP and what is included in
each of these components?
GDP or gross domestic product is the total market value of all final go
1. Define consumer surplus and producer surplus. Explain why the equilibrium price and quantity
maximizes the sum of producer plus consumer surplus (the total surplus).
Consumer surplus is
1. As a result of the rapid growth of the Chinese economy, world demand for petroleum products has
increased significantly. At the same time the war in Iraq has reduced that nation's petroleum production
1. Why is game theory more flexible than standard models of market behavior?
Game theory is a highly flexible tool that can be applied to many situations without ma
1. What are the four distinguishing characteristics of monopolistic competition? How does monopolistic
competition differ from oligopoly?
The four distinguishing characteristics of monop
1. How does accounting profit differ from economic profit? Explain why accounting profit is more useful
for paying your taxes while economic profit is more useful for deciding whether you should continue
1. What are the four central problems of macroeconomics? Which of these problems are analyzed using a
short-run framework, which are analyzed using a long-run framework, which
Chapter 01 - Economics and Economic Reasoning
Economics and Economic Reasoning
True / False Questions
1. The answers to an economy's three central economic problems are determined by the
interaction of three forces: economic forces, political f
Chapter 02 - The Production Possibility Model, Trade, and Globalization
The Production Possibility Model, Trade, and Globalization
True / False Questions
1. The production possibilities model can be used to demonstrate the concept of opportunit
1. How and why are the decisions facing a monopolist different from the collective decisions of firms in a
perfectly competitive market?
Since a competitive firm is too small to affect the price, it does not take
1. How is the Law of Demand different from the Law of Supply? In what ways are they similar to
The Law of Demand describes the behavior of consumers (consumers will buy less if the prices are
1. What is a market economy and why is it essential that government play a role in such an economy?
A market economy is an economic system based on private property and the market in which, individuals
1. Why would an increase in the marginal income tax rate likely to lead to a reduction in the number of
hours worked (all other things held constant)? Why would an increase in the marginal income tax rate
Chapter 03 - Economic Institutions
True / False Questions
1. Private property rights are essential to market economies.
2. In a market economy, society relies on the self-interest of individuals to determine wha
Chapter 11 Assignment
The Google Company has had undeniable growth and success in recent years. As they
continue to progress in the search engine market and expand into other aspects of the Internet,
critics are starting to wonder whether or n
Chapter 9 Assignment
The pharmaceutical industry has developed to become an immensely high profiting
industry around the world. Because of the success the industry has had over the years,
many new firms have chosen to enter the market in hopes
Chapter 3 Assignment
E-commerce continues to be a rising form of consumerism in the modern world. As
the Internet becomes more widely available for the average consumer, using E-commerce
becomes a feasible way to deal with daily needs. In the