Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 17, Problem 33CTQ
Explain what happens in an economy when the financial markets limit access to capital. How does this affect
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2. Understanding the U.S. poverty line
The following table shows the U.S. poverty thresholds for 2021 by size of family and number of related children under the age of 18. All figures are in
dollars. For example, a family with two adults and three children is considered to be living in poverty if the family's income in 2021 is below $32,338.
Use the table to answer the questions that follow.
Size of Family Unit
One person (unrelated individual)
None
One
Related Children under 18 Years
Two Three
Four
Five
Under 65 years
65 years and over
Two persons
Households under 65 years
Households 65 years and over
Three persons
Four persons
Five persons
Six persons
Seven persons
Eight persons
Nine persons or more
14,097
12,996
18,145 18,667
16,379 18,606
21,196 21,811 21,831
27,949 28,406 27,479 27,575
33,705 34,195 33,148 32,338 31,843
38,767 38,921 38,119 37,350 36,207 35,529
44,606 44,885 43,925 43,255 42,009 40,554
49,888 50,329 49,423 48,629 47,503 46,073
60,012 60,303 59,501 58,828 57,722…
The accompanying graphs show the production possibilities frontiers (PPFS) for Italy and India for their domestic production of
olives and tea. Without trade, assume that each country is consuming olives and tea at point a.
Use the information provided in the graphs to answer the following questions.
Olives (millions of tons)
Italy
12
10
8
60
2
a
PPF
0
10
20
30
40
Tea (millions of tons)
India
12
Olives (millions of tons)
4
6
Co
10
2
a
0
PPF
10 20 30 40 50 60
Tea (millions of tons)
QUESTION 4 (11 MARKS)
A group
of grocery stores will buy 80 units of apples from the wholesaler if the price is
$320 and 120 units if the price is $280. The supplier will supply 50 units if the price is
$100, and 75 units if the price is $150.
i.
Write the demand and supply functions.
(4 marks)
ii.
Find the market equilibrium.
(3 marks)
111.
If the government impose a tax of $30. Find the new market equilibrium.
(4 marks)
Chapter 17 Solutions
Principles of Economics 2e
Ch. 17 - Answer these three questions about early-stage...Ch. 17 - From a firms point of view, how is a bond similar...Ch. 17 - Calculate the equity each of these people has in...Ch. 17 - Which has a higher average return over time:...Ch. 17 - Investors sometimes fear that a high-risk...Ch. 17 - What is the total amount of interest from a 5,000...Ch. 17 - If you receive 500 in simple interest on a loan...Ch. 17 - You open a 5-year CD for 1,000 that pays 2...Ch. 17 - What are the- most common ways for start-up firms...Ch. 17 - Why can firms not just use their own profits for...
Ch. 17 - Why are banks more willing to lend to...Ch. 17 - What is a bond?Ch. 17 - What does a share of stock represent?Ch. 17 - When do firms receive money from a stock sale in...Ch. 17 - What is a dividend?Ch. 17 - What is a capital gain?Ch. 17 - What is the difference between a private company...Ch. 17 - How do the shareholders who own a company choose...Ch. 17 - Why are banks called financial intermediaries?Ch. 17 - Name several different kinds of bank account. How...Ch. 17 - Why are bonds somewhat risky to buy, even though...Ch. 17 - Why should a financial investor care about...Ch. 17 - What is a mutual fund?Ch. 17 - What is an index fund?Ch. 17 - How is buying a house to live in a type of...Ch. 17 - Why is it hand to forecast future movements in...Ch. 17 - What are the two key choices U.S. citizens need to...Ch. 17 - Is investing in housing always a very safe...Ch. 17 - If you owned a small firm that had become somewhat...Ch. 17 - Explain how a company can fail when the safeguards...Ch. 17 - What are some reasons why the investment strategy...Ch. 17 - Explain why a financial investor in stocks cannot...Ch. 17 - Explain what happens in an economy when the...Ch. 17 - You and your friend have opened an account on...Ch. 17 - How do bank failures cause the economy to go into...Ch. 17 - The Darkroom Windowshade Company has 100,000...Ch. 17 - Imagine that a local water company issued 10,000...Ch. 17 - Suppose Ford Motor Company issues a five year bond...Ch. 17 - How much money do you have to put into a bank...Ch. 17 - Many retirement funds charge an administrative fee...
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- The accompanying graphs show the production possibilities frontiers (PPFS) for Italy and India for their domestic production of olives and tea. Without trade, assume that each country is consuming olives and tea at point a. Use the information provided in the graphs to answer the following questions. Olives (millions of tons) Italy 12 10 8 60 2 a PPF 0 10 20 30 40 Tea (millions of tons) India 12 Olives (millions of tons) 4 6 Co 10 2 a 0 PPF 10 20 30 40 50 60 Tea (millions of tons)arrow_forwardThe U.S. Census Bureau conducts annual surveys to obtain information on the percentage of the voting-age population that is registered to vote. Suppose that 387 employed persons and 359 unemployed persons are independently and randomly selected, and that 243 of the employed persons and 202 of the unemployed persons have registered to vote. Can we conclude that the percentage of employed workers (P1), who have registered to vote, exceeds the percentage of unemployed workers (P2), who have registered to vote? Use a significance level of a = 0.01 for the test. Step 2 of 6: Find the values of the two sample proportions, p₁ and 2. Round your answers to three decimal places.arrow_forwardPlentilandia is a country facing a recession. Plentilandian consumers become pessimistic about future economic conditions and reduce their total consumption. Use diagrams to answer the following: a) Assume marginal propensity to consume is high in Plentilandia. What is the impact on consumption, investment output, interest rate and the trade balance? b) Assume the marginal propensity to consume foreign goods and services is high in Plentilandia. What is the impact on consumption, investment output, interest rate and the trade balance?arrow_forward
- Using the fundamental equation of the asset approach to exchange rates for two countries, Home and Foreign, show graphically and explain the effect on expected rate of return on Home and Foreign deposits and on the spot exchange rate if the interest rate on Foreign deposits remains unchanged, Home interest rate decreases, and the expected exchange rate is unchanged.arrow_forwardStarting with the equilibrium in the IS-LM-FX model show graphically and explain the effects on interest rate, output and exchange rate of a temporary expansionary fiscal policy. Assume a floating exchange rate.arrow_forwardUsing a diagram, show the flow of transactions within the home country in an open economy and explain each component.arrow_forward
- The figure shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation 5. At the start of the game each firm charges a low price and each earns a profit of $7,000. Suppose pricing PlayStations is a repeated game in which Walmart and Target will be selling the game system in competition over a long period of time. In this case, what is the most likely outcome? OA. a cooperative equilibrium in which each firm charges the low price OB. a cooperative equilibrium in which each firm charges the high price C. a noncooperative equilibrium in which each firm charges the high price OD. a noncooperative equilibrium in which each firm charges the low price et ("T") High "T" earns $10,000 price Walmart ("W") High price "W" earns $10,000 "T" earns $5,000 "W" earns Low price "T" earns $14,000 Low price "W" eams $14,000 $7,000 $5,000 "T" earns $7,000 "W" earnsarrow_forwardUsing a diagram evaluate how the following shocks affect the country's ability to defend a fixed exchange rate. a) The foreign interest rate decreases. b) The central bank sells government bonds.arrow_forwardConsider the following scenario. The Central Bank announces a permanent increase in the money supply of 7%. The interest rate decreases from 5% to 3%. From what you learned in this course, make a step-by-step prediction of how the price level and the exchange rate change in the short run and in the long run. You may draw a diagram to support your answer.arrow_forward
- Using the IS-LM -FX diagram, show graphically and explain the effects of an expansionary monetary policy under a fixed exchange rate regime. What happens to output, interest rate, and the exchange rate?arrow_forwardConsider China and the United States and assume that United States is the home country. Use the money market and FX diagrams to illustrate how a permanent decrease in China's money supply affects the money and FX markets.arrow_forwardThe U.S. Census Bureau conducts annual surveys to obtain information on the percentage of the voting-age population that is registered to vote. Suppose that 649 employed persons and 666 unemployed persons are independently and randomly selected, and that 364 of the employed persons and 299 of the unemployed persons have registered to vote. Can we conclude that the percentage of employed workers (P1), who have registered to vote, exceeds the percentage of unemployed workers (P2), who have registered to vote? Use a significance level of α = 0.05 for the test. Step 2 of 6: Find the values of the two sample proportions, p₁ and 2. Round your answers to three decimal places.arrow_forward
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