GDP CPI
Tariffs/Trade
MRP and MRC
Other things
Inflation
100
Calculate nominal GDP of year 2
13*18 = 234
3*12 = 36
36+234 = 270
100
A tariff benefits Whom?
Domestic producers
100
An employer hiring in a competitive labor market should hire additional labor as long as...
a. MC exceeds MR
b. Average product exceeds MP
c. The wage rate is less than MP
d. The MRP exceeds the wage rate
Answer D
100
How do we determine the demand for our resources?
a. Productivity
b. Price of another resource
c. Derived demand
d. Purchasing Power
Derived Demand
100
Give me 3 things we look at when calculating CPI Nation wide
Food and
Beverages
Housing
Apparel
Transportation
Medical Care
Recreation
Education and
Communication
Other Goods and
Services
200
What is the Real GDP Per capita of year 2 if there are 10 people?
Real GDP (10*18)+(2*12) = 204
204/10 = 20.4
200
Max’s opportunity cost for making coffee is
Andrew’s opportunity cost for making coffee is
Max .25 lamps 60/240=.25
Andrew 1 lamp 150/150=1
200
Fill out the Entire Row for 2 units of labor
MP = 10
TR = 110
MRP = 50
MRC = 20
200
In order Starting from Peak name all of the next phases of the business cycle.
Peak, Contraction(Recession), Trough, Expansion, Peak
200
What is the difference between Nominal and Real Income?
Nominal income is just your wage Real income is your wage inflation adjusted.
300
Calculate the CPI of year 2 if year 1 is the base year
Base year (10*15)+(2*10)=170
Year 2 (13*15)+(10*3)= 225
CPI= (225/170)*100= 132.35
300
Assume world price is 8 dollars
How much will domestic suppliers produce?
How much will domestic demanders consume?
How much will we export?
How much will domestic suppliers produce? 8
How much will domestic demanders consume? 2
How much will we export? 6
300
Which of the following will not shift the demand curve for labor?
A. A change in the wage rate/ resource cost
b. An increase in the price of the product that labor is helping to produce
c. The labor pool is using more capital
d. The adoption of a more efficient method of combining labor and capital in the production process
A is the correct answer.
A change in the wage rate would only change the MRC curve
300
What is the definition of a recession?
A period of temporary economic decline identified by a fall in RGDP in two Consecutive quarters.
300
You have an income of 10,000 and the price index is 196 in france what is your real income in france?
196 to 1.96
10,000/1.96= 5102.04 is your real income
400
What is the real GDP of year 1 assuming year 2 is the base year?
Real GDP Year 1:
Real GDP = Base Year Prices X Target Year Quantity
Year 1 RGDP = 60+24+340+96 = 520
400
Max and andrew make coffee and lamps. Their production possibilities schedules are below both are producing at point B
If both parties specialize based on comparative advantage what are the total gains?
Before 120+30+75+75 = 300
After 240+150 = 390
Difference 390-300 = 90
400
What is the price of the product
What is the MRC at 5 units of labor
What is the MRP at 5 units of labor
Price is $3 TR/TP = Price
MRC at 5 units of Labor is $20
MRP at 5 units of Labor is $24
400
What are the shortcomings of GDP?
It doesn't account for non-market activities, income inequality, environmental degradation, the underground economy, or leisure time.
400
If the CPI of year 1 was 224.54 and the CPI of year 2 was 230.45 what is the inflation rate
230.45-224.54=5.91 5.91/224.54=.0263*100=2.63%
500
What is the CPI of year 3 assuming year 2 is the base year?
CPI Year 3
Base Year: Base year prices X Base Year Quantity = 110 + 36 + 150 + 144 = 440
Year 3: Year 3 prices X Base Year Quantity = 264+72+120+108 = 564
CPI = (Target Year / Base Year)*100 = 564/440*100 = 128.1818
500
Assume world price is $2 but there is a tariff of $ 1
How much will domestic suppliers produce?
How much will domestic demanders consume?
What is the revenue from the tariff?
How much will we import/export?
How much will domestic suppliers produce? 3
How much will domestic demanders consume? 7
What is the revenue from the tariff? $4
How much will we import/export? 4 import
500
Where do we produce, how much profit and what kind of labor market?
Produce at 6 units of labor/input
We are making $21 of profit 171 - 150 = 21
Competitive Labor market
500
In a country that has 30 people employed 5 unemployed 10 people below the age of 16 and 5 working in the underground economy what is the unemployment rate?
30+5=35
5/35 = 0.143*100 = 14.3%
500
I have 3 people each with a salary all living in different places Which one bellow has the highest real income
Max Salary $50,000 Rent $1400
Landry Salary $60,000 Rent $1700
Savannah Salary $65,000 Rent $2000
Max 50,000/1400=35.714
Landry 60,000/1700=35.29
Savannah 65,000/2000=32.5
Max has the highest real income