PRIN.OF ECON.ACCESS CODE
2nd Edition
ISBN: 9780393691757
Author: Mateer
Publisher: NORTON
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Question
Chapter 24, Problem 1QFR
To determine
To explain:
The factors influencing
Expert Solution & Answer
Explanation of Solution
One of the most significant factors for a good economy is economic growth. The public can use the additional government spending tax revenue which occurs when there is higher economic growth. Economic growth gives firms more profit, which results in the rising of stock prices. This gives businesses the opportunity to invest more and hire more workers. This ends in the creation of more jobs, resulting in the rise in incomes. There is more money for customers to buy extra goods and services. It leads to the growth in the economy that is why positive economic growth is what all countries want. Economic growth is determinable by an outward shift of the
The three important factors for economic growth are:
- Natural resources:
Discovering more non renewable resources like minerals or oil can lift growth in economy as these increases the Production Possibility Curve of a country. Logically speaking, increasing the number of natural resources in a country is not possible. The
supply and demand of these resources must be balanced in order to prevent draining them. Better land management can enhance land value and make a contribution to economic growth. - Physical capital or infrastructure:
The costs of economic activities will be lower if there is additional investment in physical capital like factories, roads and machinery. Better and improved machinery is more efficient than manual labor. High productivity will increase output.
- Population or labor:
Increase in population leads to the rise of worker or employee availability, which implies greater work force. One drawback of huge population is that it might result in more
unemployment .
Economics Concept Introduction
Economic growth:
The rise in the output of economic products and services as opposed to one period is called economic growth. This can be evaluated in nominal or real terms (adjusted for inflation). Economic growth happens when individuals take resources and reorganize them in ways which are more useful.
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Click on the link to study the Economics in the News. Then answer the following questions.
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3. Use the AS-AD model to show the changes in aggregate demand and aggregate supply that occurred in
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Draw a point at the short-run macroeconomic equilibrium in the second quarter of 2017.
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Price level (GDP deflator, 2009=100)
LAS 16
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$16.7
100-
16.6
16.7 16.8 16.9 17.0
SAS 16
= SAS17
AD 16
17.1
17.2
17.3
Real GDP (trillions of 2009 dollars)
>>> Draw only the objects specified in the question.
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Price level (GDP deflator, 2009=100)
Fed Raises Rates As Job Gains, Firming Inflation Stoke Confidence
The U.S. Federal Reserve raised interest rates on Wednesday. The rate rise was the second in three months.
This second rise comes in an economy that is growing faster and creating jobs at a more rapid pace. These
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Source: Reuters, March 15, 2017
Describe the process by which the Fed's action reported in the news clip flows through the economy.
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...
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LAS
SAS
→
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When the Fed raises the interest rate,
A. aggregate demand decreases and short-run aggregate supply increases, and the price level falls
B. aggregate demand increases and real GDP increases
C. aggregate demand decreases and the price level falls
D. short-run aggregate supply increases and the price level falls
The graph shows the long-run aggregate supply curve and the short-run aggregate supply curve.
Draw the AD curve to illustrate the state of the economy…
Price level (GDP deflator, 2009=100)
Millennials Are Starting to Spend More
Millennials, who spend an average of $85 a day, are expected to spend at a higher rate in the next fifteen years.
Only 37 percent of Americans report higher spending today than a year ago, while 42 percent of millennials say
they are spending more. Millennials are spending more on rent or mortgages and leisure activities than they
were spending a year ago.
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Source: Business Journal, May 25, 2016
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Describe the macroeconomic equilibrium after the change in spending by millennials.
If the economy had been at a below full-employment equilibrium, then the economy will
A. move to an above full-employment equilibrium with real GDP less than potential GDP
B. move to a full-employment equilibrium as short-run aggregate supply increases at the same time
'C. move to a full-employment equilibrium and equilibrium real GDP equals potential GDP
D. remain stuck in a below full-employment equilibrium
If the economy…
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