Macroeconomics In Context 2nd Edition Neva Goodwin, Jonathan Harris, Julie A. Nelson, Brian Roach & Mariano Torras - Solutions

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1. 3. How is the concept of efficiency related to the concept of scarcity? Consider, for example, your own use of time. When do you feel that time is more, and when less, scarce? Do you think about how to use your time differently during exam week than you do when you are on vacation?
1. 2. e notion of scarcity reflects the idea that resources cannot be streted to aieve all the goals that people desire. But what makes a particular resource “scarce”? If a resource seems to be in greater supply than is needed (like desert sand), is it scarce? If it is freely open to
1.1. In ea of the following, indicate whi of the four essential economic activities is taking place, and in whi sphere.a. Ms. Katar, an executive at Acme Manufacturing, directs the cleanup of one of the company’s old industrial waste dump sites.b. Mr. Ridge plants a garden in his yard.c.
1. 17. What do we mean when we speak of economic activity “in context”?
1.16. How can we classify economic actors into three spheres?
1. 15. What is the circular flow model of economic activity?
1. 14. What is a model?
1. 13. What is the relationship between a society’s PPF and resource management?
1. 12. What kinds of decisions would make a PPF expand over time? What kinds of decisions would make it contract over time?
1. 11. Draw a societal PPF, and use it to explain the concepts of tradeoffs (opportunity cost), aainable and unaainable output combinations, and efficiency.
1. 10. How do abundance and scarcity create the possibility of, and the necessity for, economic decision making?
1.9. Define negative and positive externalities, and give examples of ea.
1. 8. What is an economic actor?
1. 7. What are some examples of final goals?
1. 6. What is the goal of efficiency?
1. 5. Is the aainment of wealth a final goal?
1. 4. What is the difference between final and intermediate goals?
1. 3. What is the difference between positive and normative questions? Give a couple of examples of ea.
1. 2. Name the four essential economic activities.
1.1. What is the definition of economics?
1. 2. Model building is sometimes compared to map making. If you wanted to give people directions for reaing the place where you live, what would you put on the map that you drew for them? What would you put on the map you drew if someone asked you about good places to go hiking, where the
1.1. Describe three situations in whi economic activities could affect its environmental context and three ways in whi economic behavior could affect its social context. How might these influences that the economy exerts on its contexts result in anging how the contexts, in turn, affect
1. 2. Consider the following possible productive activities. Whi ones do you think will tend to expand the PPF in the future? Whi ones will tend to contract it?(ere may be room for disagreement on some points.)a. Increasing educational opportunitiesb. Manufacturing lawn mowersc. Building a
1.1. Suppose that your “resources” for studying can be devoted to either or both of two subjects: this class and another class you are taking. Would the PPF for your “production” have the shape portrayed in Figure 1.1? Discuss.
1. 2. Imagine that an engineer, an artist, and an economist are all observing the construction of a new office building. Considering the three basic economic questions discussed in this section, what aspects of the process might the economist notice, and what words might she use to describe what is
1.1. e admissions office at your college decides who will be admied and who will not be. Is this an economic activity? Of what kind? (ere may be more than one correct answer.)
1. 3. For whom should economic activity be undertaken?
1. 2. How should production take place?
1.1. What should be produced?
1. 2. How can economic systems deal with the problems caused when some goals conflict with others? For example, what if a goal of increased consumption causes growing environmental damage, with some people enjoying more goods but others suffering from the effects of pollution?
1.1. You have evidently made a decision to dedicate some of your personal resources in time and money to studying college economics. Whi of the goals listed in Table 1.1 was most important to you (and perhaps to your family or community, if they were involved) in making this decision? Did any of
1. 2. In what ways do you think economics might help to provide solutions to social problems and improve overall well-being? And are there ways in whi the workings of the economic system may create social problems or make them worse? How would you hope to use economic understanding to help
1.1. What current issues are you most interested in? How do you think economics might help you understand these issues?
What is a steady-state economy?
What is a debt-for-nature swap?
How can economic growth be represented using the AS/AD graphs discussed in Chapter 13?
Are there tax policies that can reduce the deficit while also addressing environmental problems? REVIEW QUESTIONS
Do you think that we can reduce deficits while also avoiding an increase in tax rates? Why would political leaders consider tax hikes? Should everyone experience the same increase?
What would you think about a proposal to tax financial transactions? Would you prefer it to an income or a sales tax? Why or why not? REVIEW QUESTIONS
What is "quantitative easing"? Can you think of anything you learned earlier in the book to which it is related? What do you think are the main advantages and disadvantages of such a policy?
Classify each of the following as a trade flow; income flow, or asset transaction:a. A U.S. software company sells its products to European consumersb. A Saudi investor buys real estate in Europe C. A U.S. retailer imports Chinese-made appliancesd. A worker in the UK sends some of her wages back to
Singapore is a natural-resource-poor country that has built its economy on the basis of massive imports of commodities and raw materials and similarly massive exports of refined and manufactured goods and services. In Singapore, exports are 178 percent of GDP! But how can a country export more than
What reforms have been suggested for the international financial system? EXERCISES
Which do you think gives a better description of economic realities: classical or Keynesian macroeconomic theory? Explain.
What is the effect of expansionary fiscal and monetary policies in the classical model?
How does the issue of time lags affect fiscal and monetary policy?
What are some arguments in favor of having the Fed follow a money supply rule? What are some arguments against it?
Do you think that it is a good idea to allow commercial banks to invest in stocks? In real estate? In junk bonds? Explain. REVIEW QUESTIONS
What is the difference between the real, monetary, and financial economies? In what way are they related to each other? Should growth in one imply growth in the others?
Go to the Economic Report of the President at www.gpoaccess.gov/e- op/. Consult the most recent Report's table on "Gross Domestic Product." For the last year, with final rather than preliminary figures, find the values of gross domestic product personal consumption expenditures, and gross private
Using Table 10.1 and the formulas and numbers given in the text for the multiplier and tax multiplier, calculate the effect on equilibrium GDP of a government spending level of 100 combined with a tax level of 100.What does this imply about the impact of a balanced government budget on GDP,
Using the data in Table 10.1, determine the economic equilibrium for a government spending level of 60.1
What is crowding out? How specifically does crowding out happen? Explain. What is crowding in? EXERCISES
Suppose that the relation between consumption and income is C = 90 +0.75 Y.a. For each additional dollar that households receive, how much do they save? How much do they spend?b. What is the level of consumption when income is equal to 0? 360? 500? 600? (You may want to make a table similar to
Suppose that you see a toy store increasing its inventories in early December, right before the Christmas/Chanukah/Kwanzaa season. Is this a case of excess inventory accumulation? Why or why not?
Carefully draw and label a supply-and-demand diagram for the classical loanable funds market. Assuming that the market starts and ends in equilibrium, indicate what happens if there is a sudden drop in households' desire to consume.a. b. Which curve shifts and in what direction? What happens to the
What is "the income/spending multiplier"? Explain why a drop in autonomous intended investment, or in autonomous consumption, leads to a much larger drop in equilibrium income. EXERCISES
Have you ever read articles or editorials that claim that high consumption is essential for a healthy economy? Does the Keynesian model seem to confirm or challenge this idea? What are some arguments for the opposite point of view?
Which theory—classical or Keynesian—seems more realistic in describing today’s economy? Explain why.
Locate the most recent news release on employment and unemployment statistics at the Bureau of Labor Statistics Web site (- www.bls.gov). In a paragraph, describe how the labor force, overall unemployment rate, and unemployment rates by race and ethnicity, age, and education differ from the numbers
A computer software company advertises for employees, saying "We offer the best-paid jobs in the industry!" But why would any company want to pay more than it absolutely has to in order to attract workers? Can this phenomenon help to explain the existence of unemployment? Explain in a paragraph.
Suppose an economy is suffering unemployment due to wages that are "too high," as theorized by classical economists.a. Draw and label a graph illustrating this case, in which the going wage is $20, the equilibrium wage is $15, 50 million people want to work, but only 30 million are employed.b.
The population of Tatoonia is very small. Luis works full-time for pay. Robin works one shift a week as counter help at a fast-food restaurant. Sheila is retired. Shawna does not work for pay, but is thinking about getting a job and has been looking through employment postings to see what is
The small country of Nederland counts its unemployed using the same methods as the United States. Of the population of 350 people, 70 are under age 16, 190 are employed in paid work, and 80 are adults who are not doing paid work or looking for work because they are doing full-time family care, are
How can the price and availability of natural resources affect prevailing wage rates? EXERCISES
What is skill-biased technical change?
What are some reasons that wages might be "sticky"?What are "efficiency wages," and why might payment of them lead to unemployment?
Can you think of other impacts, positive and negative, of allowing workers more flexibility in setting their work hours? Would you support any specific policies to promote more choice of work hours?
Which arguments seem most convincing to you, those of classical labor market theorists, “sticky wage” theorists, or economists concerned with aggregate demand? What are some strengths and weaknesses of each argument?
The Statistical Abstract of the United States, published annually, is the source of much of the data presented in this chapter. The Statistical Abstract is available online from the U.S. Census Bureau and ProQuest. It is likely that a more recent edition of the Statistical Abstract is now
Search the Internet or other news sources for a recent article discussing the loss of U.S. jobs to other countries. Based on what you have learned in this chapter, present an analysis of the article. Can you find any statements in the article that you think may be inaccurate?
Try to estimate what share of your total expenditures is on products from the primary, secondary, and tertiary sectors. How do you think your expenditure patterns will change in the future? For example, assuming that your income rises after you graduate, do you think that your share of expenditures
Economic theory suggests that goods and services provided in competitive markets by private enterprises will result in lower prices. But we have learned that health-care costs in the United States actually are the highest in the world, although Americans do not better have health outcomes than
Consumption of oil, gas, and coal currently fuels the U.S. economy but also has other effects. How might the following be accounted for in the U.S. national accounts, if they were environmentally adjusted?a. Depletion of domestic oil, natural gas, and coal reservesb. Release of greenhouse gases
In 2011, the Deepwater Horizon oil spill in the Gulf of Mexico caused heavy damage to the fishing and tourism industries of Louisiana and other coastal states. In addition, there were long-term ecological impacts on fish and wildlife. Describe how this might be accounted for in the 2011 national
Which of the following describe a resource function of the natural environment? An environmental service function? A sink function?a. A landfillb. C. A copper mine Carbon dioxide (a byproduct of combustion) entering the atmosphered. Wild blueberries growing in a meadowe. f. A suitable temperature
The UNDP Human Development Report is available at its Web site (ww- w.undp.org). Consult this report, and choose a country that is not included in Figure 6.5. Write a paragraph describing this country's performance on the HDI as well as on three other indicators reported in the tables (such as
Go to the OECD's Web site for the Better Life Index (www.oecdbetterlif- eindex.org). Note that you can adjust the weights applied to each of the 11 well-being dimensions using a sliding scale. Adjust the weights based on your personal opinions. To which factors do you assign the most weight? To
In A paper company employs workers to plant trees. An environmental organization provides volunteers to plant trees. calculating the Genuine Progress Indicator, Which factors are subtracted because they represent negative effects on well-being?b. Which factors are not included in GPI, even though
Indicate whether each of the following actions or impacts would increase GDP.a. An individual purchases bottled water to avoid a contaminated municipal water supply.b. An individual obtains her drinking water from a water fountain at her workplace to avoid a contaminated municipal water supply.e. A
Describe in a short paragraph why measures of output do not always measure well-being. Include some specific examples beyond those given in the text.
Suppose that your national government officially adopted your preferred indicator from the previous question. How do you think this would change specific policy debates in your country? What new policies do you think could be enacted?
Of the various alternative indicators presented in this chapter, which one would you advocate as the best approach for measuring economic well-being? What do you think are the strengths and weaknesses of this indicator?
Go to the Bureau of Economic Analysis Web site (www.bea.gov). What are the latest figures for real GDP, current dollar GDP, and the growth rate of GDP? What time period do these represent? In what sort of dollars is real GDP expressed?
List the key simplifying assumptions of the traditional macro model concerning:a. The forms of capital included in the modelb. The sectors of the economyc. Who in the economy produces and invests
Assume the same simple economy described in the previous question. Calculate a constant-weight price index for the second year, using the first year as the base.b. What is the growth rate of prices (inflation rate) from the first to the second year?
Suppose an extremely simple economy produces only two goods, pillows and rugs. In the first year, 50 pillows are produced and sold at $5 each; 11 rugs are produced and sold at $50 each. In the second year, 56 pillows are produced and sold for $5 each; 12 rugs are produced and sold at $60 each. What
Using the relations among accounting categories demonstrated in the tables and identities in the text, use the information on values in the chart on the next page (measured in Neverlandian pesos) from the country of Neverland in 2010 to find values for the following categories:a. b. C. Private
In which line (or lines) of Table 5.3 (the spending approach) would the value of each of the following be counted? "Not counted in any category" is also an option.a. C. A new refrigerator bought by a familyb. A book newly produced in Indiana and bought by a store in Mexico New computers,
In which line (or lines) of Table 5.4 (the income approach) would the value of each of the following be counted? If it is part of "net income flows from the rest of the world," explain whether it reflects domestic (or foreign) production and whether it reflects domestic (or foreign) income. "Not
In which line (or lines) of Table 5.2 (the product approach) would the value of each of the following be counted? "Not counted in any category" is also an option.a. Production of fresh apples, domestically grown for profitable saleb. State health inspection services C.e. Education services provided
If you look at the government-supplied statistical tables regarding the national accounts, you might find that they often go into considerable detail about "farm" vs. "nonfarm" activities, while it is much harder to dig out good information on, for example, the activities of the finance industry.
Do you think it is a problem that the United States has a relatively low savings rate? What might be done to raise this rate, by individuals, corporations, or government?Review Questions
Suppose that the country of Atlantis is investing and exporting a great deal, while it imports little. What can you say about its level of national saving? Suppose the country of Olympus invests more than it saves. How can it do this?
Describe, using graphs, how an increase in demand affects equilibrium quantity and price. Repeat for a decrease in demand.
Describe, using graphs, how an increase in supply affects equilibrium quantity and price. Repeat for a decrease in supply.
Describe how goods can be "complementary." Describe how the demand curve for a good may be affected by an increase in the price of a second good that is complementary to the first.
Describe how goods can be "substitutes." Describe how the demand curve for a good may be affected by an increase in the price of a second good that is a substitute for the first.
Describe two factors that might cause a demand curve to shift.
Illustrate on a clearly labeled graph (a) a decrease in quantity demanded and (b) a decrease in demand.

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Macroeconomics In Context 2nd Edition Neva Goodwin, Jonathan Harris, Julie A. Nelson, Brian Roach & Mariano Torras - Solutions

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