Answered: 7. (GDP Demanded) How is the aggregate…

7. (GDP Demanded) How is the aggregate expenditure line used to identify real GDP demanded assuming a given price level?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(Figure: Total Expenditures) As the price of the product rises from $0 to $40, what happens to total expenditures? Price $100 90- 80 70 60 50- 40- 30- 20 10 D 0 10 20 30 40 50 60 70 80 Quandty a. Total expenditures increase, reaching a maximum at a price of $40. b. Total expenditures remain unchanged. OcTotal expenditures first increase and then decrease, as price approaches the midpoint of the demand curve. d. Total expenditures decrease, reaching a minimum at a price of $40.
2. Activities included (and not included) in the calculation ofGDP The gross domestic product (GDP) of the United States is defined as the all in a given period of time. Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2020. 2020 GDP Scenario Included Excluded Sofaland, a Swedish furniture company, produces a table at a plant in Virginia on December 5, 2020. It sells the table to a college student on December 24. You chop down a cherry tree on your property in California and make a dining room table in 2020. A similar table sells for $800 in a local furniture store. Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 21, 2020. It sells the car at a dealership in San Francisco on February 10, 2020. Athleticus, a U.S. shoe company, produces a pair of sneakers at a plant in Vietnam on March 10, 2020. Athleticus imports the pair…
(Money Demand) Suppose that you never carry cash. Your pay- check of $1,000 per month is deposited directly into your checking account, and you spend your money at a constant rate so that at the end of each month your checking account balance is zero. You are paid $500 twice monthly rather than $1,000 each month. You are uncertain about your total spending each month. iii. You spend a lot at the beginning of the month (e.g., for rent) and little at the end of the month. iv. Your monthly income increases.
8. (Continuing with the situation described in the preceding question.) Consider the economic model of an individual's labor-leisure choice with the following components: good w represents the hourly wage rate Y represents nonlabor income T represents total time available U(C, L) represents the individual's utility function MUC denotes the marginal utility of consumption MUL denotes the marginal utility of leisure Unless otherwise instructed, assume that consumption and leisure are normal goods. Whenever graphing the model, put C on the vertical axis and L on the horizontal axis. 4 C represents units of the consumption good L represents hours of leisure The individual maximizes his utility by choosing the optimal consumption bundle C*=90, L*=15, and H*=9. At this consumption bundle, MUC=4 and MUL=12. If p=2, what is w? 8 H represents hours of paid work p represents the unit price of the consumption O 10 O There is not enough information to determine w.
6. Which of the following is not correct? * The consumer price index gives economists a way of turning dollar figures into meaningful measures of purchasing power. The consumer price index is used by economists to measure the inflation rate. The consumer price index is used to monitor changes in the cost of living over time The consumer price index is used to measure the quantity of goods and services that the economy is producing.
2. Aggregate supply (AS) denotes the relationship between the __________________ that firmschoose to produce and sell and the _________________, holding the price of inputs fixed.(A) total quantity; price level for output (B) type of goods; input price of raw materials(C) price of goods; number of employees (D) total inputs; types of goods
6. Changes in taxes The following graph plots an aggregate demand curve. Using the graph, shift the aggregate demand curve to depict the impact that a tax hike has on the economy. PRICE LEVEL 130 120 110 g 100 90 80 Aggregate Demand 70 0 10 20 30 OUTPUT 40 50 60 Aggregate Demand (?) Suppose the governments of two very similar economies, economy Y and economy Z, implement a tax cut of equal size. The tax cut in economy Y is temporary, while the tax cut in economy Z is permanent. The economies are otherwise completely identical. The tax cut will have a smaller impact on aggregate demand in the economy with the
(Changes in Aggregate Supply) List three factors that can change the economy’s potential output. What is the impact of shifts of the aggregate demand curve on potential output? Illustrate your answer with a diagram
29.The income approach to measuring GDP: A) B) c) focuses on how income is earned, not spent. uses the factors payments made by households to businesses to estimate GDP. uses household expenditures to back out national income and GDP. D) uses of the factor payments made by household to government 30. National income is a sum of: a) spending of four sectors of the economy on GDP. b) payments to the factors of production. c) factors payments made by household to government d) factors payments made by business to government.
13. (I The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data. Nominal GDP Real GDP GDP Price Inflating? Year Billions Billions Index Deflating? 1978 $2,293.8 $5,677.72 40.40 1988 5,100.4 66.98 1998 8,793.5 $ 10,283.59 2005 10,000.0 S10,000.0 2008 14,441.4 108.48 2018 20,501.0 S15,942.92
4) The table below contains hypothetical data for country A for a given year. Country A's Goods and Services Total Household purchases of durable goods $1293 Household purchases of nondurable goods $1717 Household purchases of services $301 Household purchases of new housing $704 Purchases of capital equipment $310 Inventory changes $374 Purchases of new structures $611 Depreciation $117 Salaries of government workers $1422 Government expenditures on public works $553 Transfer payments $777 Foreign purchases of domestically produced goods $88 Domestic purchases of foreign goods $120