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How do Unemployment compare to the explanations reviewed in the chapter case study?
What is the slope of the budget line and what does it mean? Draw the budget line. Use the X-axis for bagels and the Y-axis for wine.
What is the impact of shifts of the aggregate demand curve on potential output? Illustrate your answers with a diagram.
How has the increased use of computers affected U.S. productivity in recent years? Is contribution of computers expected to increase or decrease in near future?
Rules of the Game How do rules of the game affect productivity and growth? What types of rules should a government set to encourage growth?
Explain how output per capita can grow faster than labor productivity. Is it possible for labor productivity to grow faster than output per capita?
How can each type be illustrated with a per-worker production function? What determines the slope of the per-worker production function?
However, many richer economies have little land or land of poor quality. How can a country with little land or unproductive land become rich?
Sources of Inflation Using the concepts of aggregate supply and aggregate demand, explain why inflation usually increases during wartime.
Question: Please explain utility theory----five axioms of choice under uncertainty (axioms of cardinal utility)
He/she can buy insurance at price q. How many units of the contract will the agent buy if the price is q=k?
What would be the size of the U.S. labor force? If 85 million adults are not working, what is the unemployment rate?
Inflation Why is a relatively constant and predictable inflation rate less harmful to an economy than a rate that fluctuates unpredictably?
Explain as carefully as you can why borrowers would be willing to pay a higher interest rate if they expected the inflation rate to increase in the future.
What role do inventories play in determining real GDP demanded? Suppose initially that firms are either producing more than people plan to spend, or producing.
What equalities hold at the level of real GDP demanded? When determining real GDP demanded, what do we assume about the price level?
Details: A consumer with the money-left-over utility function u(x) + m = 10 ln(x+1) +m is endowed with 100 units of x and $1000.
Real GDP Demanded In your own words, explain the logic of the income-expenditure model. What determines the amount of real GDP demanded?
What are the components of aggregate expenditure? In the model developed in this chapter, which components vary with changes in the level of real GDP?
Global Economic Watch Go to the Global Economic Crisis Resource Center. Select Global Issues in Context. How will that investment trend affect economic growth?
How does this analysis connect with what you learned about measures of quality of life in the chapter on tracking the U.S. economy?
Consumption and Saving Suppose that consumption equals $500 billion when disposable income is $0. Draw a graph of the saving function using this information.
What is the relationship between the MPC and the MPS? If the MPC increases, what must happen to the MPS?
What factors are assumed constant along the net export function? What would be the impact on net exports of a change in real disposable income?
How do changes in disposable income affect government purchases and the government purchase function? How do changes in net taxes affect the consumption functio