The Nominal GDP for the year 2015 is $7450. 4. B. Refer to the table. Find the marginal product of labor (MPL). Since cell phone output did not chang money the change in the money supply was reflected in changes 2017 to 2018 was The following table contains information on the economy's money supply, velocity of money, price level, and output. The marginal product of labor is \frac{10}{E^{0.50. Derive the current-year-quantity price index. how the actual output will deviate from potential output. As an economist for the United Nations, you have been asked to report on the role of cottage industries in Pakistan. Take the following information as given for a small, imaginary economy: -When income is $10,000, consumption spending is $6,500. If the equilibrium quantity of airplanes demanded is 200, can this economy take full advantage, The table below shows how the average cost of production for airplanes at a certain factory changes as the number of airplanes built at that factory increases. 9.5; 4.5; ____; ____; ____; Inflation-induced tax distortions Video Games 1,350.00 $60.00, In Year 2, nominal GDP is equal to: $81206.25, and real GDP is $40637.5 Conversely, when calculated using current year prices it is called nominal GDP. All of the above would push GNP above GDP. RGDP < NGDP because prices are rising. The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). = 11860 - 1250 + 600 = 11210 Economy A has a high average rate of time preference relative to economy B?s low average rate of time preference. Velocity and the quantity equation 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. From the following data, construct an expenditure schedule on a piece of graph paper. a) what is the per-worker production function? Examine the four components of GDP and different approaches to GDP calculation. The pizza company also buys $. B. all things are produced by the people of the lowest wage rate. 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. What is the base year for this particular set of CPI data? The labor supply, Think about the short-run production of a small firm that makes sweaters. The economy has two sectors-cloth and food. Production and Prices in Year 2 b. Question: Velocity and the quantity equation Consider a simple economy that produces only cell phones. Points: 1 / 1 Close Explanation 4. c. Assuming that this economy produces only the thr. The following table contains information on the economy's money supply, velocity of money, price level, and output. 3. Disposable personal income (DPI)equals $9710 billion. \end{array} 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. This country produces both goods (clothing with capital and labor; food with land and labor) and imports food. 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 you are deciding whether to spend your tax rebate check on AirPods or save the money for a new smart phone. Response has to be original. A) What is the marginal product of labor function? Assume that K is fixed at 10 in the short run. The following table contains information on the economy's money supply, velocity of money, price level, and output. \\ For example, in 2012, the money supply was $360, the price of a cell phone. Velocity \ of \ money \ (2011) \ = \ 15 The market wage for whites is $15, and the market wage for blacks is $10, Consider the following Economy: Only Coconuts are produced, using labor Year 1 Coconut Producer Total Revenue $20 Wages $5 Taxes $1.5 Interest on Loan $0.5 (a) What is the Coconut Producer contributio, Suppose you are hired to manage a small manufacturing facility that produces Widgets. Yes. There are three productive factors. Suppose the firm is operating in the short-run with K = 9. The economy experienced economic growth over time. B. Textbooks 15 90 20 100, Real GDP in 2009 equals $6680. Video Games 900 $30.00 Given the real interest rate of 4.5% per year, find the nominal interest rate on Gilberto's bonds, the after-tax nominal interest rate, and the after-tax real interest rate under each inflation scenario. Suppose that Home has 100 workers, a marginal product of 4 making apples, and a marginal product of labor of 4 making shirts. \\ b) the size of its factories. The following table contains information on the economy's money supply, velocity of money, price level, and output. This country produces both goods (clothing with capital and labor; food with land and labor) and imports food. Velocity and the quantity equation Consider a simple economy that produces only pens. For example, in 2012, the money supply was $280, the price of a pen was $7.00, and the economy produced 600 pens. (a). A slice of pizza costs $3. 1. For example, in 2011, the money s; The equation of exchange Consider a simple economy that produces only cell phones. \hline \text { white, male } & 210 & 3,360 & 13,610 & & 22,050 \\ 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 . {eq}Velocity \ of \ money \ (2011) \ = \ \dfrac{GDP}{Money \ supply} b. 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). B. fully employing all economic resources. \hline \text { all others } & & & & & \\ 2.0; 4.5; ____; ____; ____; For example, is aluminum used to produce a new mountain bike included in GDP? Suppose that the table below shows an economy's relationship between real output and the inputs needed to produce that output: Consider the following data. Numerically. Suppose GDP in this country is $1,175 million. a. not change GDP or the category under which the spending is counted. Worker B can produce 10 tables or 10 chairs, and worker C can produce 8 tables or, Suppose you are thinking of starting a new business. What is the level of productivity? Capital and land are fixed factors while labor can move, Consider Australia as a small open economy. The value of leisure is not included in GDP. Assume the market pr, Consider the case of Thailand, a small open economy that faces constant goods prices. Assume the following equations summarize the structure of an economy. Select all that apply. Then use the income-expenditure(45 line) diagram to determine the equilibrium level of GDP. (Round to the nearest 2 decimal places if necessary. The following table contains information on the economy's money supply, velocity of money, price level, and output. Disposable personal income Consumption 0 100 100 120 200 140 300 160 a. copyright 2003-2023 Homework.Study.com. a. output and prices. Personal income will Resources in an economy are not fully utilized. The consumer can borrow or save at the interest rate 10%. Use the e. Consider a simple economy that produces only pies. Production Combin, Consider the following information describing an economy with demand-determined output. For example, in 2019, the money supply was $360, the price of a pie was $9.00, and the economy produced 800 pies. The following table contains information on the economy's money supply, velocity of money, price level, and output. The government cuts public spending. National income will For example, in 2010, the money supply was $320, the price of a cell phone was $8.00, and the economy produced 600 cell phones. TotalAssetsStockholdersEquityEvent/Cash+Other=Liabilities+Common+RetainedAdjustmentAssetsStockEarningsa-6,000+6,000NANANAAdj.NA-4,500NANA-4,500\begin{array}{lrr} The inflation rate from 2017 to 2018 was. a. Get access to this video and our entire Q&A library, What Is Inflation Rate? 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 following table contains information on the economy's money supply, velocity of money, price level, and output. Rajiv manages a grocery store in a country experiencing a high rate of inflation. Explain your graph. {/eq}. (Assume that the change in fair value results from a change in market interest rates rather than a change in instrument-specific credit risk.). In 2015, the economy produces 1,000 tonnes of apples, 2,000 tonnes of oranges, and 3,000 tonnes of bananas. 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. There is no government or foreign trade. Personal Tax Payments 1,500, National income (NI) equals $11860 billion. The following table contains information on the economy's money supply, velocity of money, price level, and output. \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}\\ In 2016, the economy produced 85 f, Consider a firm with the production function, q=(K^1/2+L^1/2)^2. Learn about the inflation rate. M=money supply, V=velocity, P=price level, Y=real output, k=1/V If in year, The determinants of aggregate supply: are consumption, investment, government, and net export spending. 110x40 + 80x11 + 20x90, If nominal GDP is less than real GDP, then the price level must have fallen during the year Few foreign firms maintain facilities in the U.S. while many U.S. firms are currently operating abroad. Provide the name and shape. a. Graph Home's PPF, with apples in the horizontal axis, b. 1. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2010, the, A small open economy trades food and clothing on world markets at prices PTF and PTC. Fill in the missing values in the folowing table, 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. Experts are tested by Chegg as specialists in their subject area. What is the short-run production function? Since cell ph Change in the money supply was reflected partially did not change from 2017 to 2018 and the velocity of in changes in the price level. You will need to give up your current job that pays you $20,000. . In this economy, the level of income at which the consumer breaks even (cons. The realization of these economies of scale, however, is far, Consider a simple economy that produces two goods: pens and oranges. The following table contains information on the economy's money supply, velocity of money, price level, and output. c. decide how much government regulation there should be. Graph the PPC for both Countries. \hspace{28pt} \text{NA} \hspace{29pt} \text{-4,500} \hspace{40pt} \text{NA} \hspace{55pt} \text{NA} \hspace{45pt} \text{-4,500}\\ The following table shows the prices and quantities of the goods over a three-year period. {eq}Inflation \ rate \ from \ 2011 \ - \ 2012 \ = \ \dfrac{7.56 \ - \ 7.20}{7.2} \ \times \ 100 GDP is not adjusted for pollution and it does not account for unequal income distribution. Will you buy a flat screen or 3D television? (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? Year CPI 2010 98 2011 100 2012 106 2013 107 a. The money wage rate falls, real GDP increases, and the price level rises. Table: Inflation Rate (%); Real Interest Rate (%); Nominal Interest Rate (%); After-Tax Nominal Interest Rate (%); After-Tax Real Interest Rate (%) Fill in the missing values in the following . Assume Government cut income taxes by 10. Money \ supply \ grew \ = \ 0.05 \ or \ 5\% The following table contains information on the economy's money supply, velocity of money, price level, and output. Suppose an economy producers three goods: Apples, oranges, and bananas. Explain the effects on goods and money market separately and the interaction of these markets. Which of the following is NOT a shortcoming of GDP as a measure of well-being? With no changein aggregate demand, how does the economy return to full employment? What is the marginal pro. When GDP is computed using the base year prices, it is referred to as real GDP. For example, in 2017, the mon. Use the IS-LM-model to explain what happens to national income. PI = NI - Corp earnings + Gov Transfer Payments Suppose also that we produce 125 units of beef and 460 units of soy. GDP deflator = Nominal GDP / Real GDP 100. 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. 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? Further, assume that all of the cotton is used in the production of shirts. What he can't spend, he converts into a more stable foreign currency for a steep fee. Show more. Get access to this video and our entire Q&A library, Gross Domestic Product: Definition and Components. \hspace{17pt}\text{Adj.} Consider a simple economy that produces only pies. GDP is not adjusted for crime or other social problems. remain the same Decrease M=money supply, V=velocity, P=price level, Y=real output, k=1/V Which of t, Consider an economy described by the production function: Y = F(K,L) = K^0.4 L^0.6 a. GDP is an imperfect measure of economic well-being because it fails to measure what types of production? Denim Value+Wine Value + Textbook Value= RGDP The firm has 10 units of capital in the short run. Product Quantity Price Quantity Price B) For what values of labor does increasing marginal product exist? Capital and land are fixed factors while labor can move be, As the quantity produced by a firm increases, marginal cost eventually starts increasing because: A. of diminishing, or decreasing, marginal product of labor. Average living standards can be expected to be lower in a barter economy than in a, Consider a decrease in the supply of money that causes output to fall short of full employment as shown in the diagram to the right. -When income is $11,000, consumption spending is $7,300. For example, in 2018, the money supply was $320, the price of a pie was $8.00, and the economy produced 600 pies. Which of the following will describe the marginal product of labor (MP_L) for this production function? If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm should use: A. more capital and less labor. The following table contains information on the economy's money supply, velocity of money, price level, and output. N GDP = 137.5 x 1.5 + 1350 x 60 = 81206.25 Suppose in the short run a firm's production function is given by Q = L1/2K1/2, and K is fixed at K = 36. The following table contains information on the economy's money supply, velocity of money, price level, and output. On that date, the bond traded at a price of 99 (99% of par value) in the bond market. RaceandSex11415242564over64TOTALSwhite,male2103,36013,61022,050white,female805803,3804,930black,male104601,0601,670black,female040270330allothersTOTALS3104,65018,78029,760\begin{array}{|l|l|l|l|l|l|} Show calculations. Use the national income accounting identities to calculate, __________ (66.00/3,780.00/69.00/3600.00). Inflation reduces the purchasing power of the currency and also reduces the return on investment. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The following table contains information on the economy's money supply, velocity of money, price level, and output. What is the per-worker production function? The price of a unit of beef = $19 and the price of a unit of soy = $14. Transfer Payments 600 Suppose that John, April, and Tristan have two production plants for producing orange juice. C. maximizing the returns to factors of production. Suppose that a simple society has an economy with only one resource, labor. Money \ supply \ grew \ = \ \dfrac{12}{240} \ \times \ 100 L stands for number of workers. What do you suppose determines the, Suppose the marginal product of labor is 10 and the marginal product of capital is 8. B. The inflation rate from b. multiproduct firms will enjoy a cost advantage because they have the opportunity to divide their pool of worker, Consider three firms: firm A, a mining enterprise; firm B, a steelmaker; firm C, a car-maker. Consider a simple economy that produces only pies. Given this information, we know that a. saving per worker is less than depreciation per worker in period t. b. saving per worker, The table below contains information on Carrie's total utility TU and marginal utility MU from purchasing of pizza. All rights reserved. Consider two products, cloth and machines. Derive the short run, Economic theory suggests that as plant size increases, the average cost of production should fall. Assume that the economy is initially at point Y in the graph. 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. If firms in this industry. 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. Product Quantity Price Per Unit The marginal propensity to consume for this economy is: a. The following table shows the relationship between output and number of workers in the short run. Show how the event and its related adjusting entry affect the accounting equation. C. attempts to increase the output of the economy wil, If an economy is being "productively efficient," then that means the economy is A. producing the products most wanted by society. B) the scale of operation at which economies of scale are exhausted. 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. Suppose there are two closed economies: Economy A and Economy B. b. more capital and less la, Suppose the total cost of production in the short run is $500,000 when 2,000,000 units are produced. 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. 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. Disposable personal income will 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. Consider a simple economy that produces only cell phones. (less than), Consider the following simple economy that produces only three goods: \\ 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. What is t, Both Kate and John own saltwater taffy factories. Suppose tha, Refer to the data in the table below. Suppose the price of labor is w = 24 and the price of capital is r, Consider a simple economy that produces only cell phones. There are six equally productive individuals on the island. explain why real domestic output and the price level are directly related. DPI = PI - Personal tax payments = 11210 - 1500 = 9710. \hline Household production and the underground economy. What is the marginal product of labor? 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. The soda, pizza and cheese companies employ labor and land to produce their products. Consider the following simple model of an economy: C = 1,000 + .85(Yd) I = 780 - 800r G = 1,000 T = -50 + 0.09(Y) IM = 100 + 0.1(Y) EX = 100 + 0.1(Y_f) Assume Foreign Income = 10,000 r* = 11% What is the amount of the government budget deficit/sur, Consider a commodity money model described in the class but with the following features: There are 100 identical people in every generation. Not copy pasted answer from google. Nominal GDP (Dollars) Year Velocity of Money Quantity of Money (Dollars) 200 202 Price Level Quantity of Output (Dollars) (Pens) 5.00 400 400 2017 2018 The money supply grew at a rate of from 2017 to 2018. The Inflation rate from 2017 to 2018 was (a) In this economy, solve for national saving, inve, Consider a two-period economy where a consumer receives income of 10 in the first period and 11 in the second period. Do not include "all others" for parts fff and ggg. What is the cost of one more beer? The short-run economic outcome resulting from the increase in production costs is known as. A) financial services B) electricity C) mobile phones D) mass transportation, 3. The following table contains information on the economy's money supply, velocity of money, price level, and output. Consider a simple economy that produces only cell phones. C. all things are produced at the lowest cost. The labor costs $6 and pizza sells for $10. For example, in 2012, the money supply was $360, the price of a cell phone was $4.50, and the economy produced 800 cell . Now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 4% to 6% per year. Suppose that the economy consists of two types of firms: type A firms which produce output using a technology Qa Min 1 3K,L and type B firms which produce output using a technology Qb Min12K,L. Assume a December 31 closing date. 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. 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? 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 following . In a certain economy, when income is $100, consumer spending is $60. Alexander Holmes, Barbara Illowsky, Susan Dean, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman. Under what circumstances would GNP be much larger than GDP? (1) Describe the diff, The diagram below shows the aggregate labor market and aggregate production function for the country of Bonavista. A. Consider an economy that begins with an output equal to its natural level. The level of prices and the value of money, Money supply, money demand, and adjustment to monetary equilibrium, The classical dichotomy and the neutrality of money, Using money creation to pay for government spending, The Fisher effect and the cost of unexpected inflation. Would the difference between the real GDP per capita in 1890 and the real GDP per capita today understate or overstate the difference in the population's economic well-being? Further, assume that all of the cotton is used, Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. E. If a company follows a policy of matching maturities, this means that it matches its use of short-term debt with its use of long-term debt. b. Apple Inc. pays the designe, Suppose the following information describes a simple economy. Real GDP falls if output falls. 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. The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). The transaction costs of exchanges are lower in a barter economy than in a money economy. For example, in. On payday, he immediately goes out and buys all the goods he will need over the next two weeks in order to prevent the money in his wallet from losing value. Find the Marginal Product of Labor (MP_L). Price and quantity data are as follows: Product Market C = Ca + 0.7(Y - T) ; Ca = 1,000 - 10r ; T = 100 + 0.15Y ; Ip = 3,500 - 20r ; G = 3,000 NX = 2,000 - 0.4Y Money M. Quantecon is a country in which the theory of money operates. _______ per year. |Year|Price of Meat|Price of a Toy |2004|$3 per pound|$2 |2005|$1 per pound|$7 |2006|$4 per pound|$5 Refer to table. copyright 2003-2023 Homework.Study.com. Question: Consider a simple economy that produces only cell phones. The purchase of tires from Bridgestone tire company by an automobile manufacturer. The production function is: f(K,L) = K^1/3 L^1/3. For example, in 2017, the money supply was $200, the price of a pen was $5.00, and the economy produced 400 pens. {Q}&0&20&60&110&170&240&290&330&355&370&380 {L}&0&1&2&3&4&5&6&7&8&9&10 Suppose short run fixed cost are $200 and the wage rate for labor is $50. D. using the least costly prod. (Part A) You know that you are operating in a monopolistically competitive market, that is, you are a small part. According to the Fisher effect, as expectations adjust to the new, higher inflation rate, the nominal interest rate will ______ to If the wage rate is $15 and the firm has sunk costs of $1000 what is the firm's total cost fu, You estimate a short-run production function to be Q = 16L^{0.8} which gives a Marginal Product of Labor function MPL = 0.8*16L^{-0.2} = 12.8/L^{0.2}. Discourage Assume that there are two sectors, manufacturing and farming. The money supply grew at a rate of __________ (5%/105%/2.44%/1.44%) from 2011 to 2012. You buy an iPad from the Apple Store. Make sure to label both axis and include a dot on the curve that represents our state of economy. The following table contains information on the economy's money supply, velocity of money, price level, and output. If the GDP deflator in 2012 has a value of 98.0, then. Determinants of aggregate suppDeterminants of aggregate supply The following graph shows a decrease in aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Wages=3, Rental rates=6, Price of product = $10 a) In the short run, capital is fixed at 5. Capital goods last an average of 50 years ( O, When economies of scale exist, firms with a large volume of production will have lower costs than firms with smaller volumes of production. From this information, if income is $101, what is consumer spending? The following table contains information on the economy's output, money supply, the velocity of money, and price level. If the wage is $10 and the rental rate on capital is $20, the short-run average cost is _____, Consider the following firm with the production functionQ = F(L) = 2L^\frac12 L = labor, Wage w=12. They have a total of 2000 crates of oranges. 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 pens. B. in the short run, the firm cannot add workers. Many U.S. citizens currently work in foreign countries while few foreign citizens currently work in the U.S. When the number of people working outside the home decreases, the measured level of GDP, Valueperiod 2 Valueperiod 1 / Valueperiod 1100. Complete the second row of the table by filling in the expected and actual real interest rates on car loans immediately after the increase in the money supply (MS). List 3 factors that can change the economy's potential output. Suppose half the capital stock is suddenly destroyed(leaving the labor force unchanged). explain the three dis, Suppose the following situation exists for an economy: Kt+1/N < Kt/N. The government places a modest minimum wage on this industry above the market clearing equilibrium wage. Specifically, Related to Solved Problem Suppose the information in the following table is for a simple economy that produces only the following four goods: shoes, hamburgers, shirts, and cotton.
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