Denim Value+Wine Value + Textbook Value= RGDP Depreciation 1,400 Labor can be used to produce only two commodities - X a necessity good (food), and Y, a luxury good (music and merriment) Su, Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. B. Th, Consider the following model of a very simple economy: C=100+0.8Y+0.05W I=200 W=1,000 Y=C+I S=Y-C Assume that wealth and investment remain constant. Then the profit-maxi, A firm's production function is given by q = f(L, K) = LK + 2L^2 K - L^3. In the short-run, the level of capital is fixed. Suppose that the present equilibrium price level and level of real GDP are 100 and $215 and that data set A represents the relevant aggregate supply schedule, Refer to the information provided in the table below to answer the question that follow : Assume that this economy produces only two goods X and Y. The following table contains information on the economy's money supply, velocity of money, price level, and output. Fill in the missing values in the follow selecting the answers closest to the values you calculate. What is the cost of one more beer? Since cell phone output did not chang money the change in the money supply was reflected in changes 2017 to 2018 was This will. Consider a simple economy that produces only pies. With the steel she produced 10 authentic sculptures that she sold for $1,000 each to a local art dealer. Fill in the missing values in the following table, selecting the answers closest to the values you calculate. Suppose an economy that is initially at full employment faces a substantial increase in factor cost of production. The following table contains information on the economy's money supply, velocity of money, price level, and output. If the price of Labor, w = $12 per unit of Labor, what is the firm's marginal cost of production when the firm is producing 48 units of ou, Consider an economy where the aggregate production function is y^1/2 = k^1/2 . Corporate earnings 1,250 Assume Government cut income taxes by 10. If th, Suppose that this year's velocity is 10, nominal GDP (PY) is $50 billion, and real GDP (Y) IS $10 billion. In an economy with rising prices, compared to the base year. Find the marginal product of labor (MPL). Which of the following st, Quantecon is a country in which the theory of money operates. Inflation \ rate \ from \ 2011 \ - \ 2012 \ = \ \dfrac{0.36}{7.2} \ \times \ 100 ), An economy produces two goods, A and B; has two factors of production, K and L, and production of good A is capital-intensive, and the production of good B is labor-intensive. The following table contains information on the economy's money supply, velocity of money, price level, and output. b, Indicate on a graph of the circular flows in the market economy, the real and money flows in which the following items belong: a. a) Illustrate and explain what happens to the Economy over time and in the long-run if it ex, Using the data below, find the next set of question: a. Pineapples 50,000,000 lbs. Assume that there are two sectors, manufacturing and farming. Assume that K is fixed at 10 in the short run. Agree. In a certain economy, when income is $100, consumer spending is $60. A) What is the marginal product of labor function? For example, in 2017, the mon. The total costs C of a firm is: C = 4K + L. a. \end{array} (Part A) You know that you are operating in a monopolistically competitive market, that is, you are a small part. Gross Domestic Product (GDP) in which of the following ways? B. the economy is near full capacity. The following table contains information on the economy's money supply, velocity of money, price level, and output. Real GDP falls if output falls. The economy is in long-run macroeconomic equilibrium. There are three productive factors. Use the information in the table to calculate the inflation rate for 2010, as measured by the consumer p, The index that includes the prices of raw material and other inputs that go into the production of goods that consumers buy is called the what? b) Find the steady-state capital stock per worker, and con, Consider the following aggregate expenditure model of an economy: C = 50 + (8/9)Yd T = (1/4)Y I = 100 G = 150 X = 100 IM = (1/3)Y where C is consumption, Yd is disposable income, T is taxes, Y, i) Suppose the following information is given about an economy that is described by the Solow model with technological progress and with population growth: \delta = 0.11 g_A=0.02 g_N=0.03 Then the ste. In the U.S., gross domestic product (GDP ) and gross national product (GNP) are close in value. Video Games 1,350.00 $60.00, In Year 2, nominal GDP is equal to: $81206.25, and real GDP is $40637.5 Consider a simple economy with two countries, the United States and India. Resources in an economy are not fully utilized. Explain the following terminologies in economics Spreading the overhead. The size of its factories, c. Which short-run average-total-cost curve to use, d. All of the above are correct, Suppose in the short run, a firm is able to adjust the amount of labor (L) while the amount of capital (K*) is fixed. Using an aggregate demand-aggregate supply diagram, graphically illustrate and explain the impact of an escalating budget deficit on price level and real income in the long-run. Consider the following model of a simple economy: The economy is in a recession with high unemployment and low output. Numerically. B. more labor and less capita, Suppose a firm's production function is given by the equation Q = 12L^.5K^.5 . With no changein aggregate demand, how does the economy return to full employment? For example, in 2011, the money supply was $320, the price of a cell phone was $8.00, and the economy produced 600 cell phones. How many workers to hire, b. Question: Consider a simple economy that produces only pens. If the price per unit of the good is $1.9 and labor costs $10 per unit. The Gross Domestic Product evaluates general production in the economy. nominal GDP is larger than real GDP in years after the base year. The contract required a one-year commitment starting September 1. (c) Graph the short-run t, Imagine that an economy produces two goods: flashlights and fishing lures. Get access to this video and our entire Q&A library, What Is Inflation Rate? B. in the short run, the firm cannot add workers. Year Quantity of money Velocity of money Price level Quantity of output Nominal GDP (Dollars) (Dollars) (Cell phones (Dollars) 2017 240 15 7.20 500 3,600 , Consider a simple economy that produces only cell phones. b. Apple Inc. pays the designe, Suppose the following information describes a simple economy. What is the per-worker production function? 2. Find what is the short-run total cost function C (C as a fu, A small open economy trades food and clothing on world markets at prices PTF and PTC. remain the same The following table contains information on the economy's money supply, velocity of money, price level, and output. d. provide minimum incomes for, Consider the following changes in the economy. In a simple economy (assume there are no taxes, thus Y is disposable income), the consumption function is: C=100+0.75Y. TotalAssetsStockholdersEquityEvent/Cash+Other=Liabilities+Common+RetainedAdjustmentAssetsStockEarningsa-6,000+6,000NANANAAdj.NA-4,500NANA-4,500\begin{array}{lrr} \\ Consider the following closed-economy IS-LM model: Consumption function Investment function Government purchases and taxes Money demand function Money supply Price level : C = 800 + 0.80 (Y - T) : I, Suppose that some CPI data for a particular economy is shown in the following table. See answer Advertisement topeadeniran2 The Fisher effect and the cost of unexpected inflation c. There are only a handful of firms competing against each other in, Suppose you have a firm whose production function is given by Q=K^0.3L^0.7. For example, in 2018, the money supply was $320, the price of a pie was $8.00, and the economy produced 600 pies. A Bureau of National Affairs survey found that 79% of employers provide their workers with a two-day paid Thanksgiving holiday with workers off both Thursday and Friday (USA Today, November 12, 2009). A. Suppose the economy is operating at full-employment and all capital goods are subject to legal price ceilings set below equilibrium, Suppose that capital costs $10 per unit and labour costs $4 per unit. "If real GDP stayed the same while nominal GDP declined between 2008 and 2009, then the GDP deflator must also have declined.". Below is a Production Possibilities Table of Consumer Goods (things that consumers buy to satisfy wants) and Capital Goods (things that businesses buy to make them more productive). Real GDP = 137.5 x 1 + 1350 x 30 = 40637.5, Billions of dollars \hspace{7pt}\text{Event/} \hspace{20pt} \text{Cash} \hspace{5pt}+ \hspace{10pt} \text{Other} \hspace{5pt} = \hspace{10pt} \text{Liabilities} \hspace{5pt} + \hspace{10pt}\text{Common} \hspace{5pt} + \hspace{5pt} \hspace{5pt} \text{Retained}\\ Which of the following is NOT a shortcoming of GDP as a measure of well-being? For. Consider a simple economy that produces only cell phones. The following table contains information on the economy's money supply, velocity of money, price level, and output. For this economy, A) Sh, Consider a small open economy whose relative prices are determined externally in the international market. How. a. not change GDP or the category under which the spending is counted. Right now, the firm has 10 units of K, w = 3, and r = 10. Economists tend to assume that a firm's production function is subject to increasing returns to scale, when the amount is small, and to decreasing returns to scale, when the output is large. This firm operates in the short run where capital (K) is fixed at a quantity of 16. The following table contains information on the economy's money supply, velocity of money, price level, and output. Derive the base-year-quantity price index. b. determine how large the budget deficit should be. The following table contains information on the economy's money supply, velocity of money, price level, and output. Velocity and the quantity equation Consider a simple economy that produces only pens. Velocity and the quantity equation Consider a simple economy that produces only cell phones. What do you suppose determines the sh, Suppose we have a two good economy that produces beef and soy. The money wage rate falls, real GDP increases, and the price level rises. Use the e. Consider a simple economy that produces only pies. a. C) the smallest number of firms that co, Suppose the production function for a firm is given by: q=4L^{0.5}K^{0.25}. Disposable personal income (DPI)equals $9710 billion. People save 20% of their income, so their savings rate s = 0.20, In a certain economy, the components of aggregate spending are given by: C = 100 + 0.9(Y - T) - 500r I = 150 - 1,000r G = 200 NX = 50 T = 100 Given the information about the economy above, the immedi, Assume a specific-factors economy produces two goods, cloth and food, and that when representing the output of this economy graphically, cloth is on the x-axis and food is on the y-axis. Find short-run equilibrium output. A) financial services B) electricity C) mobile phones D) mass transportation, 3. According to the CAGE framework, which of the following is an example of a product most affected by economic distance? The government cuts public spending. (1) Describe the diff, The diagram below shows the aggregate labor market and aggregate production function for the country of Bonavista. GDP is not adjusted for pollution and it does not account for unequal income distribution. The following table shows the prices and quantities of the goods over a three-year period. Investment is equal to 400. In Home a worker can produce 3 apples or 5 bananas. A) an inefficiently small amount B) an efficient amount C) an inefficiently large amount D) none, Suppose you are the owner of a small factory which produces tables and chairs. The velocity of money remained the same at 15. Further, assume that all of the cotton is used in the production of shirts. This country produces both goods (clothing with capital and labor; food with land and labor) and imports food. 4. e. spending and prices. Inflation \ rate \ from \ 2011 \ - \ 2012 \ = \ 5\% B. all things are produced by the people of the lowest wage rate. For example, in 2019, the money supply was $280, the price of a pie was $7.00, and the economy produced 600 pies. For example, in 2014, the money supply was $240, the price of a pen was $7.20, and the economy produced 500 pens. \hline \text { white, female } & 80 & 580 & 3,380 & & 4,930 \\ Since pen output did not change from 2017 to 2018 and the velocity of money the change in the money supply was reflected v in changes in the price level. Discourage \\ Show more Business Economics Answer & Explanation Solved by verified expert C. maximizing the returns to factors of production. (All numbers are in millions of dollars) If actual real GDP in this Economy equals $3,000 million, then this Economy wi, What are capital goods? For example, in 2011, the money supply was $240, the price of a cell phone was $7.20, and the economy produced 500 cell phones. Velocity and the quantity equation Consider a simple economy that produces only cell phones. M=money supply, V=velocity, P=price level, Y=real output, k=1/V In year 1, Quantecon is a country in which the theory of money operates. C. Whe, Suppose that a firm has a production function given by: q= 10 L^{0.4}K^{0.6}. Year Pencils Muffins Price Quantity Price Quantity (Dollars per pencil) (Number of pencils) (Dollars per muffin) (Number of muffins) 2018 1 120 1 195 2019 2 130 4 195 2020 4 130 4 145 . b. There are two goods, Coal and Wheat, produced with two factors of production, capital and labour. - opportunity costs. Inflation refers to the increase in the price of the goods and services in an economy during a year. A. GDP is not adjusted for crime or other social problems. B. an economy will automatically seek the level of output a, Suppose a production function is q = K^(1/2)L^(1/3) and in the short run capital (K) is fixed at 100. B. a decrease in the number of smartphone manufacturers. remain the same Live Happley's production schedule for strawberries is given in t, Assume an industry uses labor and capital in its production process. 2000 (Base Year) 2009 \hline \text { black, male } & 10 & 460 & 1,060 & & 1,670 \\ The soda, pizza and cheese companies employ labor and land to produce their products. b.not change GDP, it changes the category under which the spending is counted. 4. The firm pays a wage of $30 per units and pays a rental rate of capital $10 per unit. You will pay $10,000 for labor costs and $12,000 for capital costs. The marginal product of oranges in one plant is MP^1=1000-O_1, Which of the following could be evidence of a market failure? Explain the following terminologies in economics Spreading the ove, Refer to the figure. For example, in 2011, the money supply was $240, the price of a cell phone was $7.20, and the economy produced 500 cell phones. Suppose a production function is q = K^(1/2)L^(1/3) and in the short run capital (K) is fixed at 100. If you were attempting to forecast the level of consumer spending by households, which measure of total production or total income might be most helpful in making your forecast? \hspace{17pt}\text{Adj.} The following table contains information on the economy's money supply, velocity of money, price level, and output. Which of the following do we subtract from GDP to obtain national income? You have 3 workers: worker A, B, and C. Worker A can produce 4 tables or 8 chairs in one day. C. the relationship between the, Consider an economy described by the following equations: Y=C+I+G+NX; Y=5000; G=1000; T=1000; C=250+0.75*(Y-T); I= 1000-50r; NX= 500-500*e; r=r*=5. Our experts can answer your tough homework and study questions. The following table contains information on the economy's money supply, velocity of money, price level, and output. explain the three dis, Suppose the following situation exists for an economy: Kt+1/N < Kt/N. Show how to think about them using the IS curve: i.e. The following table contains information on the economy's money supply, velocity of money, price level, and output. B. What is the marginal product of labor and the average product of labor in the short run? Inflation-induced tax distortions The market price of a product is above the average cost of production. B. We reviewed their content and use your feedback to keep the quality high. The equilibrium condition is Y = C+ I 2. N GDP = 137.5 x 1.5 + 1350 x 60 = 81206.25 Fill in the missing values in the following . {/eq}. . d. spending and output. The money supply grew at a rate of from 2014 to 2015. The art dealer then sold all of the sculptures to art collectors for an average of $1,200 each. Calculate the velocity of money. PI = NI - Corp earnings + Gov Transfer Payments Show how the event and its related adjusting entry affect the accounting equation. It can produce two goods, apples and bananas. Consider a simple economy that produces only cell phones. If the wage rate is $4 and the price of capital is $6, then in order to minimize costs, the firm should use: a. more labor and less capital. Decrease For example, in 2012, the money supply was $280, the price of a pen was $7.00, and the economy produced 600 pens. Assume there are no traveler's checks. Personal income (PI) equals $11210 billion. The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). Fill in the missing values in the following . GNP is the value of final goods and services produced by residents of the U.S. This tends to ______ saving, thereby ______ the quantity of investment in the economy and ______ the economy's long-run growth rate. Select one: a. Decr. All numbers are in millions of dollars. Use the information in the following table to calculate Nominal Gross Domestic Product (Nominal GDP) for 2015. Then use the income-expenditure(45 line) diagram to determine the equilibrium level of GDP. When the number of people working outside the home decreases, the measured level of GDP, Valueperiod 2 Valueperiod 1 / Valueperiod 1100. D. Net working capital is defined as current assets minus the sum of payables and accruals, and any decrease in the current ratio automatically indicates that net working capital has decreased. The economy has two sectors-cloth and food. If the wage is $10 and the rental rate on capital is $20, the short run marginal cost is _____. b) Suppose that velocity increases to 11 and economy's output of goods and services, Consider an economy describe by the following equations: Y = C + I + G + NX Y = 8,000 G = 2,500 T = 2,000 C = 500 + 2/3(Y - T) I = 900 - 50r NX = 1,500 - 250e r = r* = 8 a.In this economy, so. The firm has 10 units of capital in the short run. The company's production f. Suppose the production function for a firm is given by q = 5L0.5K0.25. Fill in the missing values in the following table. 2) If year 1 is the base year, the valu. What is the optimal labor demand in the short run? For example, in 2016, the money supply was $360, the price of a cell phone was $9.00, and the economy produced 800 cell phones. For example, in 2017, the money supply was $360, the price of a pie was $9.00, and the economy produced 800 pies. Understand how to use the inflation rate formula through examples. From this information, if income is $101, what is consumer spending? B) $4 per unit, and average fixed cost (AFC) is, A firm has the production function q = 0.2LK + 5L^2K - 0.1L^3K. . This is an example of the ___________ of inflation. The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). For example, in 2011, the money supply was $280, the price of a cell phone was $7.00, and the economy produced 600 cell phones. \hline \text { white, male } & 210 & 3,360 & 13,610 & & 22,050 \\ DPI = PI - Personal tax payments = 11210 - 1500 = 9710. If the price of Labor, w = $12 per unit of Labor, what is the firm's Marginal Cost of production when the firm is producing 48 units of, Consider an economy that produces consumer goods and capital goods. D. all of the above, Consider the following short run production function. a. (Enter your response as an integer.) What are consumer goods? A) What is the value of beef produced in our econom, Consider a firm with short-run production function Q = K + L. Right now, the firm has 10 units of K, w = 3, and r = 10. Consider a simple economy that produces only croquettes. What benefits do cottage industries provide to local populations? For a given output level, a firm's short-run average product of labor is 4 while its marginal product of labor is 5. The short-run average variable cost is a. und, The production possibilities curve illustrates the basic principle that: a. the production of more of any one good will, in time, require smaller and smaller sacrifices of other goods. What is the marginal pro. You are dealing with the concept of - comparative advantage. The following table contains information on the economy's money supply, velocity of money, price level, and output. Suppose also that we produce 125 units of beef and 460 units of soy. Numerically. What is the best. What is the opportunity cost of apples? Assume it is currently in its initial steady state. \hline \text { black, female } & 0 & 40 & 270 & & 330 \\ National income will Fill in the missing values. Which of the following will describe the marginal product of labor (MP_L) for this production function? The marginal product of oranges in plant 1 is MP1 = 1,000 - 01 and in-plant 2 is MP2 = 1,200 - 202. . 9.5; 4.5; ____; ____; ____; Inflation-induced tax distortions For example, in 2010, the, A small open economy trades food and clothing on world markets at prices PTF and PTC. Identifying costs of inflation b) the size of its factories. In the short run, the firm has 16 units of capital. Round to 2 decimal places. Assume an economy where the production function is F(K,L) = L2/3K1/3 if L is 125 and K is 1000. How do you know? What is the level of productivity? Is it true that in a short-run production process, the marginal cost curve eventually slopes upward because firms have to pay workers a higher wage rate as they produce more output? Disposable personal income will Explain your graph. The market wage rate w=1 and price of capital r=4. Personal Tax Payments 1,500, National income (NI) equals $11860 billion. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Draw graphs to support your answer. You can produce 30 units that you can sell, The first principle of economics is that people face trade-offs. Make sure to label both axis and include a dot on the curve that represents our state of economy. Price and quantity data are as follows: b. \\ Inflation reduces the purchasing power of the currency and also reduces the return on investment. He is paid in cash twice per month. Wine 90 11 80 10 1. On that date, the bond traded at a price of 99 (99% of par value) in the bond market. We will let suicide victims be our population. The table below provides information about an open economy with a public sector. \hspace{28pt} \text{NA} \hspace{29pt} \text{-4,500} \hspace{40pt} \text{NA} \hspace{55pt} \text{NA} \hspace{45pt} \text{-4,500}\\ Question: 5. The inflation rate from 2011 to 2012 was __________ (5%/2.44%/1.44%/105). Suppose the economy experiences a negative shock to the banking system. The following table contains information on the economy's output, money supply, the velocity of money, and price level. {/eq}, GDP (2012) = Money supply * Velocity of money, {eq}Price \ of \ cell \ phones \ (2012) \ = \ \dfrac{GDP}{Cell \ phones} If the consumer s money income is 20, the a) consumer can obtain a combination of 5 units of both C and D, b) price of C is 4 and the price of D is 2, c) price of C is 2 and the price of D is 4, d) pri, Assume a technological advance leads to lower production costs. Paul s Pizza Parlor bakes pizza pies according to the following production function: Q = 3L + 0.3L^2 - 5L^3. Question: Consider a simple economy that produces only cell phones. Under what circumstances would GNP be much larger than GDP? 2009 Q x 2000 P = Value L stands for number of workers. Examine the four components of GDP and different approaches to GDP calculation. c. Suppose that government expenditures fall by 500, The table below contains data for a hypothetical closed economy that uses the dollar as its currency. In 2015, the economy produces 1,000 tonnes of apples, 2,000 tonnes of oranges, and 3,000 tonnes of bananas. For example, in 2010, the money supply was $200, the price of a cell phone was $7.50, and the economy produced 400 cell phones. Learn the definition of gross domestic product (GDP) and review types and examples. Learn about the inflation rate. Explain briefly why an economy that c. The table below provides information about an open economy with the public sector. All of the above would push GNP above GDP. Question: Consider a simple economy that produces only cell phones. Suppose that the exchange rate is flexible and that there is a permanent increase in total factor productivity (TFP), i.e., both z and z' increase.
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