1.Explain how each of the following events will influence the demand or supply of red wine, and predict the change in equilibrium price and equilibrium quantity.
a. A major health study finds that the antioxidants in red wine may help prevent
heart diseases.
b. The number of wineries increases.
c. Personal disposable income of consumers decrease.
d. It is expected that future prices of wine will be higher.
e. A big increase in wages occurs for the workers in the wine industry.
2. Use the data below to compute answers to the questions that follow.
ITEM Amount in billions of Dollars.
Consumption expenditure 390
Government expenditure 110
Imports of goods & services 40
Interest and investment income 52
Profit of corporations and government
enterprises. 80
Income from farms and unincorporated
businesses 50
Gross investment 180
Export of goods and services, 55
Wages, salary and supplementary labour income 378
Capital consumption allowance 60
Indirect taxes less subsidies 75
a. Use the expenditure approach to calculate GDP.
b. Use the income approach to calculate GDP
c. Calculate net domestic product ( At factor cost )
d. compute net investment and net export.
3. If the civil war decreases labour productivity in Syria, explain what will happen to the following
a. Potential GDP
b. Employment
c. The real wage rate.