(Round to the nearest 2 decimal places if necessary. Explain briefly why an economy that c. The table below provides information about an open economy with the public sector. GDP is an imperfect measure of economic well-being because it fails to measure what types of production? Derive the base-year-quantity price index. Agree. Velocity and the quantity equation Consider a simple economy that Be su. Velocity and the quantity equation Consider a simple economy that produces only cell phones. Disposable personal income (DPI)equals $9710 billion. Foreign has 100 workers, a marginal product of labor of 8 making apples a, Assume the marginal rate of substitution between land and labor is 2 in producing apples and 1 in producing oranges. This country produces both goods (clothing with capital and labor; food with land and labor) and imports food. Refer to the table. . Assume Government expenditure has increased by 10. CH 17 Flashcards | Quizlet Nominal GDP can increase if output falls and prices rise. National income will The marginal product of labor is \frac{10}{E^{0.50. For a given output level, a firm's short-run average product of labor is 4 while its marginal product of labor is 5. Gross National Product (GNP) differs from U.S. Fill in the missing values in the following . 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. Is the purchase of a final good Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. What is the marginal product of labor? When a significant fraction of domestic production takes place in foreign-owned facilities, a country's difference between GDP and GNP is as follows: Which of the following would be included in the gross national product (GNP) of the United States? EC 111 Test 3 questions Flashcards | Quizlet If firms in this industry. b. This tends to ______ saving, thereby ______ the quantity of investment in the economy and ______ the economy's long-run growth rate. Select one: a. Decr. b. From this information, if income is $101, what is consumer spending? Calculate the GDP of this economy by the product and the expenditure approach, assuming that all values ar, Which of the following would show an efficient economy? 3. Use a production possibilities frontier to illustrate society's trade-off between two "goods" a clean environment and the quantity of industrial output. Live Happley's production schedule for strawberries is given in t, Assume an industry uses labor and capital in its production process. Consider a simple economy that produces only cell phones. Which range of aggregate supply would represent an economy in the short term when prices are sticky and the economy is producing low levels of output? The labor costs $6 and pizza sells for $10. b) Suppose five of the planes produced were now sold overseas rather than domestically. As an economist for the United Nations, you have been asked to report on the role of cottage industries in Pakistan. Instruction: E, The following table shows prices an quantities for two goods over three different time periods. B. the economy is near full capacity. Each individual is endowed with 10 units of the consumption, The short run aggregate supply curve shows: A. what happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant. 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. Use the information in the following table to calculate Nominal Gross Domestic Product (Nominal GDP) for 2015. Inflation-induced tax distortions The production function is: f(K,L) = K^1/3 L^1/3. Suppose the base year is 2001. \hline \text { Race and Sex } & \mathbf{1 - 1 4} & \mathbf{1 5 - 2 4} & \mathbf{2 5 - 6 4} & \text { over 64 } & \text { TOTALS } \\ Production and Prices in Year 1 (Base year) What are the equilibrium levels of: a. GDP? The Gross Domestic Product evaluates general production in the economy. RGDP < NGDP because prices are rising. Consider a simple economy that produces only cell phones. The following Answered: Velocity and the quantity equation | bartleby Investment is equal to 400. 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 . 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. 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. The labor supply, Think about the short-run production of a small firm that makes sweaters. Even if GDP included these types of production, why would it still be an imperfect measure of economic well-being? a. What benefits do cottage industries provide to local populations? Production Combin, Consider the following information describing an economy with demand-determined output. 4. The following table contains information on the economy's money supply, velocity of money, price level, and output. Suppose the production function is q=L^{0.75}K^{0.25}. When the number of people working outside the home decreases, the measured level of GDP, Valueperiod 2 Valueperiod 1 / Valueperiod 1100. Last year, she purchased $7,000 worth of scrap metal. B) For what values of labor does increasing marginal product exist? Select all that apply. In the United States, the difference between GNP and GDP is _________ that of many other countries. The following table contains information on the economy's money supply, velocity of money, price level, and output. \hline \text { black, male } & 10 & 460 & 1,060 & & 1,670 \\ Each inhabitant can gather 25 coconuts in one day or bu, An economy produces three goods, soda, cheese, and pizzas, each by a separate firm. = 11860 - 1250 + 600 = 11210 Money \ supply \ grew \ = \ 0.05 \ or \ 5\% b. an economy will automatically seek the level of output at which, In the long run, a firm that produces and sells textbooks gets to choose: a. Denim Value+Wine Value + Textbook Value= RGDP For example, in 2011, t, a. There are six equally productive individuals on the island. Which of the following will describe the marginal product of labor (MP_L) for this production function? Price \ of \ cell \ phones \ (2012) \ = \ \$7.56 All rights reserved. For example, in 2017, the money supply was $360, the price of a cell phone was $4.50, and the economy produced 800 cell phones. 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. Points: 1 / 1 Close Explanation 4. Consider a simple economy that produces only cell phones. C. Whe, Suppose that a firm has a production function given by: q= 10 L^{0.4}K^{0.6}. The following table shows the prices and quantities of the goods over a three-year period. L stands for number of workers. The nominal interest rate on the bonds adjusts automatically to account for the inflation rate. Since cell phone output did not change from 2017 to 2018 and the velocity of money the change in the money supply was reflected In changes in the price level. a. output and prices. Question: 5. (Solved) - Consider a simple economy that produces only cell phones In the short run, the firm has signed a lease to r, Maya papaya runs a profit maximizing firm in which she uses capital (k) and labor (l) to make her pies. Using the line drConsider a decrease in the supply of money th, An economy with zero net exports is described below: C= 80 + 0.75 (Y - T) I^p= 100 G= 150 NX= 0 T= 180 The multiplier in this economy is 4. a. Indicate whether the following statement is correct or incorrect. Today, the typical American works fewer than 40 hours per week. 1) If year 2 is the base year, the value for this economy's real GDP in year 3 is? Currently, each factory is producing 1,000 boxes of taffy at the same total cost. All of the above would push GNP above GDP. Consider a simple economy that produces only cell phones. In 2011, the value of the GDP deflator is, Based on the table, in Year 2, the value of the GDP deflator is 1960/1680 x 100 =, A simple economy produces two goods, Corn Bread andVideo Games. I am unsure of the answers to this question 4. Velocity and the Suppose the firm is operating in the short-run with K = 9. The firms production function is : f(k, l) = k1/3L1/2 The rental cost of Captain is 1$/unit and, 1. Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. Consider a simple economy that produces only cell phones. - opportunity costs. The price of output is 'p,' the, Suppose a firm's short-run production function is given by Q = F(L) = 10L. (Solved) - Consider a simple economy that produces only loaves of bread \\ Real GDP falls if output falls. b) the size of its factories. Use the IS-LM-model to explain what happens to national income. A) emplo, Suppose in the short run a firm's production function is given by Q = L^{1/2}K^{1/2}, and that K is fixed at K = 36. The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). 1.44% Quantity of Money (Dollars) Price Level (Dollars) Quantity of Output (Cell phones) Nominal GDP (Dollars) ve 2.44% Year Money 500 2017 240 7.20 5% 500 2018 252 105% The money supply grew at a rate of from 2017 to 2018. This means that if we reduce labor by one in oranges, we need one more unit of land, Suppose the production function is y = 2K^{0.5}L^{0.5} and in the short-run K is fixed at K = 16. In an economy with rising prices, compared to the base year. Suppose tha, Refer to the data in the table below. 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. GDP deflator = Nominal GDP / Real GDP 100. Disposable personal income Consumption 0 100 100 120 200 140 300 160 a. Further, assume that all of the cotton is used, Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. For example, in. Suppose you are deciding whether to spend your tax rebate check on AirPods or save the money for a new smart phone. C. all things are produced at the lowest cost. 1. The money wage rate falls, real GDP increases, and the price level rises. For example, in 2017, the money supply was $200, the price of a pen was $5.00, and the economy produced 400 pens. D. using the least costly prod. What is the opportunity cost of apples? The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). 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. Explain your graph. For example, in 2019, the money supply was $280, the price of a pie was $7.00, and the economy produced 600 pies. The economy has two sectors-cloth and food. Discuss with 2 diagrams: (The aid of aggregate output market diagram and money mar, Suppose the information in the following table is for a simple economy that produces only the following four goods: shoes, hamburger, shirts, and cotton. The following table contains information on the economy's money supply, velocity of money, price level, and output. Pineapples 50,000,000 lbs. Eskew, Inc., which closes its books on December 31, is authorized to issue $500,000 of 9%, 15-year bonds dated May 1, 2018, with interest payments on November 1 and May 1. The minimum cost, Consider a firm with short-run production function Q=K+L.
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