Macroeconomics Private And Public Choice 13th Edition James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson - Solutions

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7. (LO 5) The data below show the total production (in millions) of the only two goods produced in Kitchener and Waterloo, two small planets in deep space:Kitchener: 16 kiwis or 12 trucks; Waterloo: 8 kiwis or 14 trucksa) What is the opportunity cost of a kiwi in Kitchener?b) What is the
6. (LO 6) Shangri-La produces only two goods: bats and balls. Each worker comes with a fixed quantity of material and capital, and the economy’s labour force is fixed at 50 workers. Table 1.16 indicates the amounts of bats and balls that can be produced daily with various quantities of labour.a)
Number of Production Number of Production Workers of Balls Workers of Bats 0 0 0 0 10 150 10 20 20 250 20 36 30 325 30 46 40 375 40 52 50 400 50 55 TABLE 1.16a) From these data, calculate Utopia’s production possibilities to complete Table 1.14.a) If Lanark is producing 16 cars, approximately
4. (LO 6) Utopia produces only two products: cheese and wine. The production levels are shown in Table 1.13.A B C D E F Cheese 0 Wine 0 TABLE 1.14 A B C D E F Wheat 0 20 35 45 50 52 Cars 21 20 18 14 8 0 TABLE 1.15 Daily Daily
3. (LO 6) Table 1.12 shows the production possibilities for the country of Emilon.A B C D E Rice 0 50 90 120 140 Beef 50 45 35 20 0 TABLE 1.12 CHEESE WINE% Inputs Output % Inputs Output 0 0 0 0 20 30 20 40 40 50 40 70 60 65 60 95 80 75 80 105 100 80 100 110 TABLE 1.13a) What is the total cost of
2. (LO 6) Table 1.11 shows the production possibilities for the country of Emilon.Complete the following (approximate) possibilities for Emilon:a) 130 rice and beefb) rice and 40 beef Which of the following possibilities is Emilon capable of producing?c) 100 rice and 40 beefd) 70 rice and 35 beef
How much tea is gained and what is the cost in coffee?a) In moving from u to v tea is gained at the cost of .b) In moving from w to x tea is gained at the cost of .c) In moving from y to z tea is gained at the cost of .
1. (LO 6) Answer the questions below based on Figure 1.12, which is for the country of Quantz
17. Graph the following equations on a single graph, using the same scale for each axis, with the horizontal axis to 120 and the vertical axis to 200, both in squares of 10.a) Y = ½Xb) Y = 40 + Xc) Y = 160 - ½Xd) Y = -10 + 2X
16. What are the equations that correspond to the four lines shown in Figure T.14?
15. What are the values of the slopes of the four lines shown in Figure T.13?
Price per CD Quantity (hundreds of thousands)$20 20 19 30 18 40 17 50 16 60 15 70 14 80a) Graph the table with the price on the vertical (y) axis and the quantity on the horizontal (x) axis.b) What is the slope of the line?c) What is the value of the Y-intercept?d) What is the equation for this
13. Given the lines shown in Figure T.12, complete the following tables, and calculate the equations for the lines:a) Y X 020 40 60 80 100 Y X 020 40 60 80 100 b)FIGURE T.12 TABLE T.12
12. Complete the following schedules, and plot the following equations:a) Y = -200 + 2X Y X 0100 200 300 400 Y X 0100 200 300 400b) Y = 500 - 4X
11. Table T.11 shows the dollar value of commercial sea fishing in Canada for 2002.a) From these data, construct a bar chart.b) Construct a pie chart showing the percentage of the total that each species represents.
10. T or F The logic fallacy post hoc, ergo propter hoc means“after this, therefore because of this.”
9. T or F If the equation Y = 5 + 2X were plotted, the slope of the line would be equal to 1/2.
8. T or F The slope of a straight line is measured by dividing the run by the rise.
7. T or F Since disposable income and consumer spending both rise together over time, there is a direct relationship between the two.
6. T or F Three popular types of graphs are pie charts, bar graphs, and line graphs.
5. T or F Spending on social services is the largest category of spending by (all) governments in Canada.
4. T or F The largest single source of government tax revenue is personal income taxes.
3. T or F Over 50 percent of Canada’s exports are resources.
2. T or F Ontario has the largest provincial economy and the largest provincial population, and it is Canada’s largest province in area.
1. T or F Canada is the world’s largest country in area and has 1 percent of the world’s population.
“Given the incentive of elected political officials to spend and their reluctance to tax, two-thirds approval of the House and Senate should be required for both spending measures and increases in government debt.” Do you think this is a good idea? Why or why not?
Does an increase in the national debt increase the supply of money (M1)? Can the money supply increase when the U.S. Treasury is running a budget surplus?
How does foreign ownership of Treasury bonds influence the incentive of U.S. policy makers to follow sound policies? Is this good or bad? Explain.*
Would you predict that government expenditures would be higher or lower if taxes (or user charges)were required for the finance of all expenditures?Why? Do you think the government would spend funds more or less efficiently if it could not issue debt? Explain.
How does the Social Security system currently influence the size of the budget deficit? How will it influence the deficit a decade from now? Is this a cause for concern? Why or why not?*
When government bonds are held by foreigners, the interest income from the bonds goes to foreigners rather than to Americans. Would Americans be better off if we prohibited the sale of bonds to foreigners?
What is the difference between the national debt and privately held federal debt? Why is the distinction between the two important?*
Does the national debt have to be paid off at some time in the future? What will happen if it is not?
What does the Japanese experience of the 1990s indicate with regard to the return of housing and stock prices to their pre-crisis levels? Why might the future pattern in the United States differ from that of Japan during the 1990s?
What are the most important lessons Americans can learn from the Japanese experience of the 1990s?
How did the policy response in the United States following the sharp reductions in housing and stock prices in 2008 differ from that of Japan following the collapse of asset prices in 1990? How were the policy responses similar?*4. What happened to the share of the Japanese population age 65 and
How was the economic experience of Japan prior to and after 1990 similar to that of the United States prior to and after 2008?*2. Describe the fiscal policy of Japan during the 1990s. Did the Japanese fiscal policy help promote recovery? Why or why not?
Could the United States ever experience another Great Depression? Why or why not?*5. “I’m for international trade, but not when it takes jobs from Americans. If the American worker can produce the product, Americans should not buy it from foreigners.” Do you agree with this statement?Why or
“Franklin Roosevelt is recognized as one of our greatest presidents because his New Deal policies brought the Great Depression to an end.” Evaluate this statement.
Do the length and severity of the Great Depression reflect a defect in the operation of markets?Do they reflect a failure of government policy?Discuss.
“The Great Depression was caused by the 1929 stock market crash. The 1929 collapse of stock prices was the most severe in U.S. history, and therefore it is not surprising that it caused a prolonged period of economic hardship.” Evaluate this statement.
Some charge that the Crisis of 2008 was caused by the “greed” of Wall Street firms and other bankers.Do you agree with this view? Do you think there was more greed on Wall Street in the first five years of this century than during the 1980s and 1990s?Why or why not?
When did mortgage default and housing foreclosure rates begin to rise rapidly? When did the economy go into the current recession? Was there a causal relationship between the two? Discuss.*5. When mortgage originators sell mortgages to Fannie Mae, Freddie Mac, and investment banks the originators
What happened to the credit standards (e.g., minimum down payment, mortgage loan relative to the value of the house, and creditworthiness of the borrower) between 1995 and 2005? Why did the credit standards change? How did this influence the housing price bubble and later the default and
Why did housing prices rise rapidly during 2002–2005? Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the current recession began?
Are stocks a risky investment? How can one reduce the risk accompanying stock market investments ?
Congress is currently considering legislation that would increase both the tax on dividends and the tax on capital gains derived from the appreciation of assets. How would an increase in the tax rate applied to dividends and capital gains income affect stock prices? Why?
What is the random walk theory of stock prices?What does it indicate about the ability of “experts”to forecast accurately the future direction of stock prices?
What is an indexed equity mutual fund? What is a managed equity mutual fund? How will the administrative costs of the two differ?
If an investment adviser gives you some hot new stock tip, is it likely to be a “sure thing”? Why or why not? If you have a stockbroker and purchase the stocks promoted by the broker, are you likely to earn a high return on your stock investments? Why or why not?*5. The stocks of some
Suppose that more expansionary monetary policy leads to inflation and higher nominal interest rates.How is this likely to affect the value of stocks?Explain.*3. Microsoft stock rose from less than $10 in 1995 to more than $100 per share in 2000. Microsoft has made sizable profits but never paid a
Indicate how the production, marketing, and distribution of each of the following are likely to be influenced by the development of the Internet: (a) popular music, (b) movies, (c) automobiles, (d) commercial employment agencies, (e) physician services, and(f) health care. Briefly explain your
What effect does the Internet have on the efficiency of markets? Explain. How is the Internet likely to influence productivity and the growth of output in the years immediately ahead?*2. The share of airline tickets bought over the Internet has grown rapidly, whereas the percentage of groceries
How have the size and functions of government changed during the last two centuries? Did the framers of the U.S. Constitution seek to limit the size of the federal government? If so, how?
Compared with the situation prior to 1981, the marginal tax rates imposed on individuals and families with high incomes are now lower. What was the top marginal personal income tax rate in 1980? What is the top rate now? Are you in favor of or opposed to the lower marginal rates? Why?*5. As the
Because the structure of the personal income tax is progressive, a larger share of income is taxed at higher rates as income grows. Therefore, economic growth automatically results in higher taxes unless offsetting legislative action is taken. Do you think this is an attractive feature of the
During the last four decades, a smaller share of the federal budget has been allocated to national defense and a larger share to income transfers and health care. Does economics indicate that this change will help Americans achieve higher living standards?
Is a trade surplus indicative of a strong, healthy economy? Why or why not?*13. ”Changes in exchange rates will automatically direct a country to a current-account balance under a flexible exchange rate system.” Is this statement true or false?*14. Several members of Congress have been highly
If taxes imposed on personal and corporate income increased substantially in the United States and the monetary policy of the United States was less stable and more inflationary than other countries, how would these policies affect the trade deficit? Why?*11. If foreigners have confidence in the
Rapidly growing strong economies often experience trade deficits, whereas economies with sluggish growth often have trade surpluses. Can you explain this puzzle?*8. In recent years, a substantial share of the domestic capital formation in the United States has been financed by foreign investors. Is
Explain why the current-account balance and capital-account balance must sum to zero under a pure flexible rate system.
Will a flexible exchange rate bring the imports of goods and services into balance with the exports of goods and services? Why or why not?*4. The accompanying chart indicates an actual newspaper quotation of the exchange rate of various currencies. On February 2, did the dollar appreciate or
How will the purchases of items from foreigners compare with the sales of items to foreigners when the foreign exchange market is in equilibrium?Explain.
“Physical obstacles like bad roads and stormy weather increase transaction costs and thereby reduce the volume of trade. Tariffs, quotas, exchange rate controls, and other human-made trade restrictions have similar effects.” Evaluate this statement. Is it true? Why or why not?*1. If the dollar
As U.S. trade with low-wage countries like Mexico increases, will wages in the United States be pushed down? Why or why not? Are low-wage workers in the United States hurt when there is more trade with Mexico? Discuss.*16. “Tariffs not only reduce the volume of imports, they also reduce the
“The United States is suffering from an excess of imports. Cheap foreign products are driving American firms out of business and leaving the U.S. economy in shambles.” Evaluate this view.*14. The United States uses an import quota to maintain the domestic price of sugar well above the world
In recent years, the European Union has virtually eliminated trade restrictions among its members, and most members now use a common currency.What impact have these changes had on European economies?*12. Does international trade cost Americans jobs? Does interstate trade cost your state jobs? What
How do tariffs and quotas differ? Can you think of any reason why foreign producers might prefer a quota rather than a tariff? Explain your answer.*10. It is often alleged that Japanese producers receive subsidies from their government permitting them to sell their products at a low price in the
Suppose that a very high tariff was placed on steel imported into the United States. How would that affect employment in the U.S. auto industry? (Hint:Think about how higher steel prices will impact the cost of producing automobiles.)*8. “Getting more Americans to realize that it pays to make
“The average American is hurt by imports and helped by exports.” Do you agree or disagree with this statement?*6. “An increased scarcity of a product benefits producers and harms consumers. In effect, tariffs and other trade restrictions increase the domestic scarcity of products by reducing
Suppose as the result of the Civil War that the United States had been divided into two countries and that, through the years, high trade barriers had grown up between the two. How might the standard of living in the “divided” United States have been affected? Explain.*4. Can both of the
Why do American households and businesses buy things from foreigners? What are the characteristics of the items we buy from foreigners? What are the characteristics of the things we sell to foreigners?*2. “Trade restrictions limiting the sale of cheap foreign goods in the United States are
Why will political decentralization make it more difficult for governments to levy taxes and spend the revenues on things that provide citizens with little value relative to cost?
Even though workers in low-wage countries often seek to emigrate to higher-wage countries, the flow of investment toward low-wage countries is small.Why is this so?*
Firms can choose where to establish a production facility. What are some of the major factors that will influence whether a firm will invest and produce in a country?*
Why are income levels in the United States so high? Is the United States prosperous because it is democratic? Discuss.*
Does a country have to be democratic in order to achieve economic freedom? If a country is democratic, will it necessarily be economically free?Why or why not?
Do we count on majority rule to protect civil liberties such as the right to free speech, freedom of the press, the right to assembly, and religious freedom?Should we count on majority rule to protect economic rights like the freedom to trade, the freedom to compete in the business or occupation of
What conditions must be present for a country to achieve a high score on the Economic Freedom of the World index?
If there were no high-income developed countries like those of Western Europe, North America, and Japan, would less-developed countries like Hong Kong, Singapore, South Korea, China, and India have been able to grow so rapidly in recent decades? Explain.*
Does the legal system of a country influence its economic performance? From an economic viewpoint, what are the key characteristics of a sound legal system?*
What are the major sources of economic growth?Why do some countries grow and achieve high income levels while others stagnate in poverty?What do you think can be done to change this situation?
Indicate five of the world’s economies that are most free. How do the income levels and growth rates of freer economies compare with those that are less free?
What is economic freedom? Indicate some of the ways in which institutions and policies in economies that are more free differ from those that are less free.
”The rich countries are getting richer, while the poor are getting poorer.” Evaluate this statement.
Indicate five of the fastest-growing economies in the world since 1990. Why do you think these economies have grown so rapidly?
Indicate five countries with a high income per capita. Why do you think the income is so high in these countries? How many of your high-income countries also ranked among the fastest-growing countries in the world since 1990?
Suppose that you have just been appointed to a high-level position in the economic analysis unit of the State Department. The Secretary of State has asked you to prepare a memo describing the key policies and economic arrangements that less-developed countries should follow in order to achieve
“The institutional environment is the key to economic growth. If a nation creates an environment conducive to economic growth, people will supply and develop the resources and technology.” Evaluate this view. Is the proper economic environment more important than the supply of resources? Why or
What impact do natural resources have on economic growth? Will it be possible for a country with few natural resources to grow rapidly? Why or why not?
How does money of stable value influence the volume of trade? When the inflation rate is volatile, how is the volume of trade affected? How will this influence the income levels of people?
What must an entrepreneur do in order to introduce a new innovative product? What determines whether the new product will be a success or failure? How important is innovation as a source of economic growth? Discuss.*8. “Because government-operated firms do not have to make a profit, they can
“Regulatory policies that restrict trade and voluntary agreements between parties will retard economic progress.” Indicate why you either agree or disagree with this statement.
More than 200 years ago, Adam Smith argued that the wealth of nations depends on gains from (a)specialization and trade, (b) expanding the size of the market, and (c) discovering better (more productive) ways of doing things. Explain why you either agree or disagree with Smith’s view.*5. Why is
Indicate in your own words why trade, entrepreneurial discovery, and investment are important sources of economic growth and achievement of high income levels.*3. “Without aid from industrial nations, poor countries are caught in a poverty trap. Because they are poor, they are unable to save and
How does economic growth influence the living standards of people? Does it really make much difference whether an economy grows at 2 percent or 4 percent annually? Discuss.
Is a market economy inherently unstable?Historically, have policy errors been the primary source of economic instability? Cite empirical evidence to support your response to each of these questions.
Prior to the mid-1970s, many economists thought that inflation would lead to a lower rate of unemployment. Why? How does the modern view of the Phillips curve differ from the earlier view?*11. Answer the following questions:a. What is the most important thing the Fed can do to promote economic
How did integration of expectations into the Phillips curve analysis and rejection of the view that higher inflation will reduce the unemployment rate affect macro policy in the last two decades?
Many central banks now indicate that their primary objective is to keep inflation at a persistently low rate. If the rate of inflation is persistently low, will this help reduce the ups and downs of the business cycle? Why or why not?

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Macroeconomics Private And Public Choice 13th Edition James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson - Solutions

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