ECON Module 2 Homework COMBINED
How does the inability of foreign investors to repatriate profits impact a developing economy?
It inhibits foreign investment.
Since the 1960's, development proceeded without many natural resources in
Japan
Which measure of productivity describes the increase in production that occurs after accounting for the changes in all inputs?
Multifactor productivity
Which of the following is far more likely to be an important part of actual production in the Sudan than it is in the United States?
Non-market transactions
Now assuming that supply changes to S2, what will be the total revenue to corn growers?
$10 million
*GRAPH* Initially assuming that the supply curve is S1, what is the total revenue to corn growers?
$16 million
Suppose a Boeing 777 is sold to a Chinese company for $250 million and resells it to a Hong Kong airline for $251 million. GDP will count this as
$250 million.
Wheat question
$4, 60,000 OR Surplus of 25,000
If a market basket was defined in 2018 and it cost $10,000 to purchase the items in that basket in 2018, while it cost $11,000 to purchase those identical goods in 2019, then the inflation rate from 2018 to 2019 is
(110-100)/100*100%=10%.
Investment in physical and human capital is typically encouraged by
*All options*
In developing economies, the fraction of the economy in non-market transactions can be as much as
50 percent.
If a society has 250 million people over the age of 16, 145 million who are working, and 5 million who are looking for work, with 100 million others neither working nor looking for work, the labor force participation rate is
60% (150/250).
If there are 325 million Americans, 162 million with jobs (with 2 million of those in the active duty military), 8 million who are out of work and looking for jobs, and 155 million who do not have jobs and are not looking for work, what is the unemployment rate?
8/168 or 4.8 percent
Which of the following can make the unemployment rate fall?
A decrease in the number of people who are looking for work and an increase in the number of people with jobs.
The expenditures approach to GDP equals
Consumption + Gross Investment + Government Purchases + Net Exports.
A recession causes a local factory to lay off 30 workers:
Cyclical unemployment
Since the 1960's, some of the best examples of transition from developing to developed economies can be found in
East Asia.
More people live in the U.S. rural sector than in the urban sector.
False
Most government benefits to farmers go to small farmers.
False
Price supports create shortages.
False
Overall income disparity can be measured by the
Gini Index.
Which population group is largely responsible for the increase in the labor force participation rate during the period from 1950 to 2000?
Women
The elasticity of demand is related to the slope of the demand curve
but also the (price, quantity) position on the demand curve.
In measuring gross domestic product (GDP), goods produced by foreign firms in the United States are
counted, but goods produced by American firms in foreign countries are not counted.
If demand is inelastic and the price of the product decreases, overall producers' incomes will:
decrease
On the basis of the changes in price and total income noted in the previous two questions (as well as the slope of the demand curve), we can say that the:
demand for corn is inelastic.
If a firm cannot determine the demand for the good it sells is elastic or inelastic but discovers that every time it raises its price, its total revenue declines, it can conclude its
demand is elastic.
If Real GDP contracted by more than 10%, economists would label that a
depression
Of these, economists consider this the worst:
depression
Gross domestic product (GDP) is counted using two methods: one which counts all the ways people _____ money and another which counts all the ways people _____ money.
earn, spend
Having an education system that lags behind that of other countries has a long-term consequence to U.S. economic growth because
education is a key component of productivity, which is key to economic growth.
A 5 percent decrease in price results in an 8 percent increase in quantity demanded. In this case, demand is
elastic
A retailer noticed that by decreasing its price, its total revenue increased. In this case, demand is
elastic
If the price of a good increases by 5% and the quantity demanded decreases by 10%, then at that price, the good is
elastic
Seasonal adjustment is used in economic data to _____ the changes in those variables that are the result of regular patterns associated with the calendar.
eliminate
In order to grow economically Germany needs to
ensure that worker productivity continues to improve.
Unemployment rates typically increase dramatically from December to January because the holiday sales season ends. For this reason, it is best to
focus on November/December decreases.
Tim just graduated and is looking for a job:
frictional unemployment
In the last five years, the elasticity of supply for gasoline has increased dramatically. All other things equal, this would be expected to contribute to
greater price stability.
In order to grow economically Mexico needs to
improve social, political, financial, legal, and economic institutions to foster growth.
The total revenue/expenditure rule of elasticity suggests that when price and total revenue go
in opposite directions, demand is elastic.
A reason the government might establish price supports for wheat could be to:
increase the incomes of wheat farmers.
The goal of government supply restriction programs has been to:
increase the price of farm products.
A bumper crop will ____________ supply and ___________ the price of a farm product.
increase, decrease
Increases in worker productivity usually reflect
increased education and improved equipment.
The ultimate source of long-term growth in already developed countries is
increased worker productivity.
If a country increases its basic literacy rates, it will impact its economy by
increasing aggregate supply.
The demand for most farm commodities is:
inelastic
If the price of a good decreases by 10% and the quantity demanded increases by 5%, then at that price, the good is
inelastic.
A 14 percent decrease in price results in a 10 percent increase in quantity demanded. In this case, demand is
inelastic. The demand curve would be steep
Increases in worker productivity usually reflect policies that encourage
investment in physical and human capital.
Suppose there are only two goods (Good A and Good B) and the average person buys 8 of Good A in a year and 6 of Good B. If the Price of Good A is $8 and the Price of Good B is $6, the price of the market basket
is 100
Suppose this is the base year and there are only two goods (Good A and Good B) and the average person buys 8 of Good A in a year and 6 of Good B. If the Price of Good A is $8 and the Price of Good B is $6, the price index
is 100
For the ruler of a developing country, the opportunity cost of a choice to invest in universal education
is the reduction in health care spending.
The consumer price index (CPI) is a heavily criticized measure of inflation because
it consistently overstates the increase in the cost of living.
One problem with using real gross domestic product (RGDP) as a measure of social welfare is that
it fails to count home production.
The fact that the demand for pasta is inelastic should not surprise you because
it is very cheap food.
One of the biggest problems for developing countries is that they all too often
lack the financial, physical, and social infrastructure to grow.
Low wages and low-cost land in developing countries will not attract foreign investment in manufacturing facilities if the developing countries
lack well-developed infrastructure.
The largest share of government payments to farmers have gone to:
large farms and agribusiness.
If the price of a good increases by 10% and the quantity demanded remains unchanged, then at that price, the good is
perfectly inelastic.
International comparisons of Gross National Income using the concept of purchasing power parity are based upon the
relative cost of purchasing a similar market basket of goods.
On a graph of real gross domestic product over time, recessions appear as
relatively short and shallow drops on an otherwise increasing path.
If the price of gasoline has increased from $3 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 266.66, then you know that the inflation adjusted price of gasoline has
remained constant.
The "core rate" of inflation
removes food and energy from the price index.
In 2019, General Motors announced the closure of its Lordstown, Ohio assembly plant. Those laid off as a result would likely be classified as
structurally unemployed.
Because there has been extensive technological change in agriculture over time:
supply has increased more than demand.
The value to the consumer is
the area under the demand curve from the origin to the quantity purchased.
Deadweight Loss is defined as
the loss to society that results from production being too high or too low.
When supply increases, price will decrease by a greater amount the:
the more inelastic is demand.
When demand is inelastic and bad weather causes crop failures for corn farmers so that the market supply of U.S. corn decreases substantially:
the overall income of U.S. corn farmers will increase.
The formula for elasticity of demand (in words) is
the percentage change in quantity divided by the percentage change in price.
Inflation is measured using _________ in a price index.
the percentage year-to-year increase
Among countries with per capita GDP in 2006 of greater than $24,000,
the political structure tends to be relatively democratic.
The net gain to society from the operation of a competitive market in equilibrium is
the sum of consumer surplus and producer surplus.
When looking at the impact of a change in trade policy, economists use consumer and producer surplus to look at the winners and losers. Free-trade economists insist that
there are winners and losers but that the gain to the winners is greater than the loss to the losers.
For a linear and upward sloping supply curve and a linear downward sloping demand curve, when the consumer has to pay a positive price for the good, the producer surplus is a
triangle.
If the price of a good increases by 10% and the quantity demanded decreases by 10%, then at that price, the good is
unit elastic.
In order to sustain economic growth in a developed economy, it is important for
worker productivity to increase.
Hundreds of ski lift operators are out of work in March
Seasonal unemployment
Hundreds of New York legal jobs permanently disappear when a lot of legal work gets outsourced to lawyers in India:
Structural unemployment
Thousands of bus and truck drivers permanently lose their jobs when driverless, computer-driven vehicles make human drivers redundant:
Structural unemployment
Which of the following is not used to increase the demand curve for U.S. farm products?
Supply restriction programs
For an economist to say that too much of the good is produced, what must be true?
The consumer surplus plus the producer surplus must be smaller than it could be.
Suppose the CPI was 140 last year. This year it is 154.
This years inflation rate is 10 percent
"Dumping" is exporting a product at low prices, even below its cost.
True
Because demand for farm products is inelastic, lower prices mean lower incomes for farmers.
True
Rural poverty rates are higher on average than suburban poverty rates.
True
Which advantage does a typical developing country have in attempting to draw foreign investment?
Very low wages
Sustainable economic growth depends upon
both saving and investment.
Suppose a developing country is falling further behind the developed countries that it neighbors. As an economic consultant, you are called to look at its policies to recommend changes. If you saw all of the following on your visit, which of them could be an explanation for the slow growth in the economy?
You see that new companies must bribe local officials to move their exports to the docks. OR You see that companies have to get official approval to remove their profits back to their home country. OR You see that the central bank leadership is tied very closely to the party of the elected officials.
The net cost to society from prohibiting the operation of a competitive market in equilibrium is
a deadweight loss.
Among countries with per capita gross national income in 2006 of less than $2,000,
agriculture tends to produce a larger share of GDP.
Suppose a DVR is bought from China for $200 and sold in the US for $250. GDP will count this
as a net of $50 ($250 sale minus $200 import).
Combined the consumer surplus and producer surplus at equilibrium is
as big as it can be.
If inflation increases unexpectedly due to an increase in oil prices, this helps
borrowers
Because the demand curve is downward sloping, the elasticity of demand is
negative (however, the negative sign is assumed and therefore ignored).
The major difference between nominal GDP and real GDP is
nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices.
With 125 million people working, 8 million out of work and looking for work, and 147 million neither working nor looking for work, "underemployment" would be illustrated by
part of the 125 million holding low-skill jobs when they were qualified for high-skill jobs.
If the price of a good increases by one thousandth of 1% and the quantity demanded goes to zero, then at that price, the good is
perfectly elastic.
