ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma Extra Problems #1 Suggested Answers and Comments Notice: (1) This set of extra problems contains 25 multiple-choice problems and 6 analytic (short-answer) problems. These problems are not homework and will not be graded. The aim of these problems is to provide you with additional exercises. (2) I will give solutions of the assignment and the “extra-problem” set after the due date. Page 1 Problem 1~25: Multiple choice problems 1. C 2. A 3. D This problem helps you pay attention to the difference between variables and functions. First, whether prices (wages are prices for labor) are assumed to be flexible or 4. C sticky depends on the time …show more content…
Page 3 28. Economic statistics are not perfect. Explain at least one way in which each of the following statistics as currently calculated in the United States fails to completely or accurately measure the corresponding economic concept (in parentheses): a. real GDP per person (economic well-being); b. CPI (cost of living); c. unemployment rate (involuntary unemployment). Ans. a. The official measure of GDP does not include measurements of leisure time available, nonmarket production, production in the underground economy, the distribution of income, or production externalities (e.g., pollution). b. The CPI does not allow substitution away from products with rising prices and has difficulty distinguishing between price changes and quality changes in products included in the index. c. The official unemployment rate does not take into account discouraged workers, parttime workers who desire full-time employment, and workers employed in jobs not matching their skill level, such as taxi drivers with PhDs in physics. In short, it is difficult to exactly measure these economic variables. The prevalence of measurement error in economic variables is one of the difficulties faced by economists. 29. Nominal GDP ($ billions) Real GDP ($ billions 2000 chain-weighted) 2009 $14,700 $12,100 2010 $15,200 $11,900 Based on the data in the table above, explain what happened to output and prices in the economy between 2009 and 2010. Ans. Real
2. What were the weaknesses of each of the following methods of stabilizing the industry?
The economy of Brazil is in the top ten largest economies along with the United States. It is the biggest in Latin America. Actually it is the seventh largest in the world. Brazil has used its newly found economic mechanism to syndicate its outcome in South America and show more of a role in the Global Businesses. The Obama Administration’s National Security Strategy recognizes Brazil as a developing center of effect, and greets the management of the country’s joint and global issues. The United States and Brazil associations mostly have been good in the recent years. But Brazil has other strengthening relations with neighboring countries and expanding ties with nontraditional partners in the South that’s developing.
Using the data and your own economic knowledge, assess the case for financing universities mainly through charging fees to their students.
A corporate business enterprise is established under a specific legal framework where laws governing the operations and functioning of the enterprise are outlined. The activities of the enterprise are monitored and therefore such an enterprise is recognized by law. This is important due to the fact that legal suits can be filed by the enterprise within the provisions of the law.
Answer the next question on the basis of the following production possibilities tables for countries Alpha and Beta:
Question 4 Use the following table to answer the questions that follow: According to the table, the labor force participation rate in this economy is equal to:
iii. How does the average annual growth rate you calculated in (ii) above compare to the average growth rate the U.S. normally expects?
In the Private Sector, there are many choices to be made by Business managers regarding which “projects” to borrow for and which “projects” to invest in. These choices often contain a great deal of ______________________ as well as the potential for benefits (profits).
Despite the city’s positive response to the coffee shop’s renovation, other businesses in the area have not followed suit in renovating the many decrepit buildings and abandoned lots. How might the presence of an externality be in part the cause of this?
d. The percentage of the labor force that is out of work and the difference in average income from country to country