QUESTION 1.

Complete the following questions for this section using the data provided. Show your work to receive credit.

GDP or DY	Consumption or C	Saving or S
$ 0	$ 80
$ 50	$125
$100	$170
$150	$215
$200	$260
$300	$350

1A. At a level of DY = $50, Saving would be ____. How did you find your answer?

Complete the rest of the Saving column. (5)

1B. Calculate the MPC. Show your work. What does this mean for this economy? (5)

1C. Calculate the MPS. Show your work. What does this mean for this economy? (5)

1D. How is possible for Saving in an economy to be negative? (3)

1E. Explain why Savings tend to increase in an economy during a recession. (3)

QUESTION 2.

USE THIS GRAPH to answer the next series of questions.

Consider this reporter's analy- pliances, the right furnishings. Consumption sis of the online archives of The "This is the period of time While we buy foreign-pro- New York Times: While use of where being a consumer be- duced goods, other nations eat its true cost in loss of natural re- sources, health damage to work CONTINUED FROM PAGE C10 "citizen" has stayed relatively up our entertainment - one of ers, and the pileup of waste. steady decade-to-decade since comes not simply a way of life the few industries with a posi- that is an entitlement of being an "In the past three decades In the late 19th century, manu- 1880, use of "consumer" and "cus- tive trade balance. But televi- American, it also is a sign of loy- sion also spreads consumer de- alone, one-third of the planet's acturers began to produce prod tomer" increased about fortyfold alty," Ewen said. "Middle class sire, displaying high-end prod- natural resources base has been acts aimed at a mass market - and twentyfold, respectively. life begins to be defined as spend- consumed," Leonard says in the ing money you don't have." ucts whether or not the viewer pocket watches, condoms, razor Product designers began to can afford them, critics say video. "We have become a na- blades, paper shirt fronts. In the talk openly about making goods In the second half of the 20th less durable in order to encour To Korten, this hurts more tion of consumers. Our primary early 20th century, they discov- century, department and chain than our wallets. identity has become that of con- :red that women control much age new purchases, and saw grocery stores replaced indepen "The quest for money deepens sumer, not mothers, teachers, of a family's spending, and start- such planned obsolescence as dent retailers rooted in the com- our alienation, which advertis- farmers, but consumers. The d selling sanitary napkins, a strategy to end the Great De- munity. Consumer spending con- ers then connect to and assure primary way that our value is Kleenex and household appli pression. They also incorporat- tinued to climb, from 62 percent us their products will make up measured and demonstrated is inces, said Giles Slade, author ed aosthetics into hasic goods, of gross domestic product in 1981 the deficit and make us feel con- of "Made to Break: Technology from bathroom fixtures to by how much we ... con- to 70 percent last year, according nected and popular and accept- sume." and Obsolescence in America." stoves, with the understanding to Mark Zandi, chief economist able and that requires more What would happen if ev- As we became used to buy- that the fashion would change at Moody's Economy.com in money," he said. "It becomes a eryone trimmed consumption? ng throwaway products, often over time. West Chester, Pa. self-reinforcing cycle." "In the near term, we don't made by a stranger in a distant "It's a handy economic model None of this happens in isola- Korten is among activists de- want consumers to rein in their actory, manufacturers quickly for the manufacturers to devel tion. spending too aggressively be- aw the potential profit if cus- op an item that needs to be re- When we buy more from oth- crying consumption and er. couraging Americans to spend cause then everything falls omers treated a wider range placed every three years or ev- er countries than we produce and work less. apart," said Moody's Zandi. "In of goods as disposable. They ery year," Slade said. for export, it creates a trade A similar argument appears the long term it would be thera- urned to convincing people to After World War II, the econo- deficit - $811 billion in 2006 - peutic if they reined in spending juy new things before the old my was booming and companies and leaves excess dollars in the in "The Story of Stuff," an online video by Annie Leonard that be- a little bit and saved more. It's a nes wore out. found a ready consumer market hands of foreign manufacture moans the impact consumerism matter of moderation." "This starts with the great for everything from nylon stock- ers. Some overseas investors has had on the environment and One thing's for sure: The dea of General Motors that peo- ings to inexpensive watches. use their dollars to buy U.S. as- world is watching as we choose ple want to have new cars which The 1950s and '60s brought sub- sets, such as Treasury securi- developing countries, where a course. nay differ from old cars only urban sprawl and our obses- ties, stocks, even entire Ameri- manufacturers exploit both raw Katherine Reynolds Lewis can n cosmetic differences," said sion with our homes: having the can companies. But those wary materials and labor be contacted at katherine.lewis@ Richard W. Bailey, an English right car, the right kitchen ap- of our economy sell dollars in We throw out 99 percent of our newhouse.com professor at the University of the foreign exchange markets, purchases within six months, Michigan. which drives down the value. according to the video. And People who had thought of "It's a handy That's why the dollar fell about while it seems cheaper to re- hemselves as "customers," a 10 percent last year as the mort- place a broken electronics de- word that connotes a personal economic model for gage crisis unfolded. vice than to repair it, the gad- elationship between seller and the manufacturers And because the money we get's low price doesn't reflect buyer, began to be treated as spend fuels so much economic nonymous "consumers." to develop an item activity elsewhere - 19 percent The field of advertising devel- of global GDP, according to 2006 ped as marketers saw oppor- that needs to be statistics - any belt-tighten- unity in selling things people replaced every three ing in the U.S. makes the world lesired, as opposed to things nervous. hey needed. Journalist Samuel years or every year." Strauss lamented this changing :thic, writing in the mid-1920s: Giles Slade, author of "Made The American citizen's first to Break: Technology and mportance to his country is no Obsolescence In America." onger that of izen but that of consumer.&quot