Will a hike in the gas tax, Refer to the budget line shown in the diagram. The short-run economic outcome resulting from the increase in production costs is known as. The following table contains information on the economy's money supply, velocity of money, price level, and output. B. an economy will automatically seek the level of output a, Suppose a production function is q = K^(1/2)L^(1/3) and in the short run capital (K) is fixed at 100. Points: 1 / 1 Close Explanation 4. B. This country produces both goods (clothing with capital and labor; food with land and labor) and imports food. For. This is an example of the ___________ of inflation. copyright 2003-2023 Homework.Study.com. What are consumer goods? C. attempts to increase the output of the economy wil, If an economy is being "productively efficient," then that means the economy is A. producing the products most wanted by society. (Enter your response as an integer.) Further, assume that all of the cotton is used, Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. The following table contains information on the economy's money supply, velocity of money, price level, and output. Find what is the short-run total cost function C (C as a fu, A small open economy trades food and clothing on world markets at prices PTF and PTC. \hspace{7pt}\text{Event/} \hspace{20pt} \text{Cash} \hspace{5pt}+ \hspace{10pt} \text{Other} \hspace{5pt} = \hspace{10pt} \text{Liabilities} \hspace{5pt} + \hspace{10pt}\text{Common} \hspace{5pt} + \hspace{5pt} \hspace{5pt} \text{Retained}\\ 1. c. There are only a handful of firms competing against each other in, Suppose you have a firm whose production function is given by Q=K^0.3L^0.7. {eq}Velocity \ of \ money \ (2011) \ = \ \dfrac{GDP}{Money \ supply} Production Combin, Consider the following information describing an economy with demand-determined output. Is the purchase of a final good Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2012, the money supply was $360, the price of a cell phone was $4.50, and the economy produced 800 cell phones. The following table contains information on the economy's money supply, velocity of money, price level, and output. The bonds offer a real interest rate of 4.5% per year. Show the math work a.) The money wage rate falls, real GDP increases, and the price level rises. Assume Government expenditure has increased by 10. Assume that the market clearing assumption should and that Labor receives a wage equal to the MPL (dY/d, The first principle of economics is that people face trade-offs. The government taxes nominal interest income at a rate of 10%. \\ Year Pencils Muffins Price Quantity Price Quantity (Dollars per pencil) (Number of pencils) (Dollars per muffin) (Number of muffins) 2018 1 120 1 195 2019 2 130 4 195 2020 4 130 4 145 . Learn the definition of gross domestic product (GDP) and review types and examples. (c) Graph the short-run t, Imagine that an economy produces two goods: flashlights and fishing lures. Average living standards can be expected to be lower in a barter economy than in a, Consider a decrease in the supply of money that causes output to fall short of full employment as shown in the diagram to the right. You can produce 30 units that you can sell, The first principle of economics is that people face trade-offs. Use the national income accounting identities to calculate, __________ (66.00/3,780.00/69.00/3600.00). Now consider the long-run impact of the change in money growth and inflation. For example, in 2011, the money s, Suppose Home has 300 units of labor. Velocity and the quantity equation Consider a simple economy that produces only cell phones. For this economy, A) Sh, Consider a small open economy whose relative prices are determined externally in the international market. C), Fill in the blanks (_) and explain your answer: If a firm is using a lot of capital and just a little labor, the marginal product of labor is (_) relative to the marginal product of capital making it, Consider a simple economy that produces only pies. \hline \text { all others } & & & & & \\ Suppose that in this economy, there is a pla, The market supply of labor is A) The sum of all jobs created in the economy B) Different for each individual based on training and education levels C) The total of all goods produced in the economy, Assume the economy can be described by the following set of equations: C/\bar{Y} = 0.4 +0.8\bar{Y}\\ I/\bar{Y} =0.3-2(R-\bar{r})\\, All of the following will cause a shift in the supply of smartphones EXCEPT A. an increase in the cost of producing smartphones. Assume a December 31 closing date. Derive an equation for the (short run) average product of labor and for the short run marginal product of labor. Identifying costs of inflation C. the relationship between the, Consider an economy described by the following equations: Y=C+I+G+NX; Y=5000; G=1000; T=1000; C=250+0.75*(Y-T); I= 1000-50r; NX= 500-500*e; r=r*=5. In the short run, K is fixed at K=10. Inflation reduces the purchasing power of the currency and also reduces the return on investment. 4. \hline \text { black, female } & 0 & 40 & 270 & & 330 \\ Product Quantity Price Per Unit Disposable personal income will We will let suicide victims be our population. Now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 4% to 6% per year. Given the real interest rate of 4.5% per year, find the nominal interest rate on Gilberto's bonds, the after-tax nominal interest rate, and the after-tax real interest rate under each inflation scenario. Consider a simple economy that produces only pies. B. will be falling the more the firm is, Suppose in the short run a firm's production function is given by Q = L^(1/2) x K^(1/2), and that K is fixed at K = 9. Derive the current-year-quantity price index. a) What is the price level and money supply? Further, assume th, Suppose that the table below shows an economy's relationship between real output and the inputs needed to produce that output: Input Quantity Real GDP 300.00 $400 225.00 300 150.00 200 a. Eskew, Inc., which closes its books on December 31, is authorized to issue $500,000 of 9%, 15-year bonds dated May 1, 2018, with interest payments on November 1 and May 1. Indirect Business Taxes 40 The size of its factories, c. Which short-run average-total-cost curve to use, d. All of the above are correct, Suppose in the short run, a firm is able to adjust the amount of labor (L) while the amount of capital (K*) is fixed. Suppose a production function is q = K^(1/2)L^(1/3) and in the short run capital (K) is fixed at 100. Quantity of Money Price Level (Dollars) Quantity of Output (Cell phones) Nominal (Dolla: Year Velocity of Money increased 2017 7.20 500 2018 decreased 15 500 remained the same The mo rate of from 2017 to 2018. b. If the price of Labor, w = $12 per unit of Labor, what is the firm's Marginal Cost of production when the firm is producing 48 units of, Consider an economy that produces consumer goods and capital goods. Below is a Production Possibilities Table of Consumer Goods (things that consumers buy to satisfy wants) and Capital Goods (things that businesses buy to make them more productive). Image transcription text The total amount of money received in an economy by it, Use examples to distinguish between the resource market and the product market in the circular flow model. Suppose the price of labor is w = 24 and the price of capital is r, Consider a simple economy that produces only cell phones. What is the level of productivity? The following table contains information on the economy's money supply, velocity of money, price level, and output. C. each additional unit is cheaper to produc, When economies of scope are strong, a. large-scale, single-product firms will be able to reach a minimum efficient scale (MES) more quickly. What is the marginal pro. (a) In this economy, solve for national saving, inve, Consider a two-period economy where a consumer receives income of 10 in the first period and 11 in the second period. For example, in 2011, the money supply was $280, the price of a cell phone was $7.00, and the economy produced 600 cell phones. Since cell phone output did not change from 2011 to 2012 and the velocity of money __________ (increased/decreased/remained the same) , the change in the money supply was reflected __________ (partially/entirely) in changes in the price level. a. Be su. According to the Fisher effect, as expectations adjust to the new, higher inflation rate, the nominal interest rate will ______ to Become a Study.com member to unlock this answer! In the short-run, the level of capital is fixed. b. b) What is the optimal ratio of c, When an economy is on the flat portion of its AS curve: A. small changes in the price level have little or no effect on the amount of production in the economy. Compared with lower inflation rates, a higher inflation rate will ______ the after-tax real interest rate when the government taxes nominal interest income. In the short run, a firm that produces and sells cell phones can adjust a) where to produce along its long-run average-total-cost curve. If the equilibrium quantity of airplanes demanded is 400, can this economy take full advantage, The table below shows how the average cost of production for airplanes at a certain factory changes as the number of airplanes built at that factory increases. The money supply grew at a rate of from 2014 to 2015. The following table shows the relationship between output and number of workers in the short run. The following table contains information on the economy's money supply, velocity of money, price level, and output. Finally, suppose consumer goods are subject to legal price con, An economy is described by the following equations : C=40+0.8(Y-T) I^p=70 G=120 NX=10 T=150 a) Find the short-run equilibrium GDP for this Economy b) Suppose the potential output for this Economy is $, Consider the information below for a simple economy. We reviewed their content and use your feedback to keep the quality high. Then, average total cost (ATC) is A) 25 cents per unit and average fixed cost (AFC) is 15 cents per unit. Personal Tax Payments 1,500, National income (NI) equals $11860 billion. Show more. Velocity and the quantity equation Consider a simple economy that produces only pies. We are interested in possible relationships between age, race, and sex. Agree. The firm pays a wage of $30 per units and pays a rental rate of capital $10 per unit. c. In the absence, Suppose a firm with a production function given by Q=4K^0.25L^0.75 produces 100 units of output. Assume that the aggregate production function has the form Y = K^(1/3) L^(2/3). Consider a simple economy that produces only cell phones. Assume an economy where the production function is F(K,L) = L2/3K1/3 if L is 125 and K is 1000. The table gives the number of suicides estimated in the U.S. for a recent year by age, race (black or white), and sex. \end{array} The realization of these economies of scale, however, is far, Consider a simple economy that produces two goods: pens and oranges. a, The production possibilities curve illustrates the basic principle which states that: A. the production of more of any one good will in time require smaller and smaller sacrifices of other goods. The company's production f. Suppose the production function for a firm is given by q = 5L0.5K0.25. Production from a U.S. firm that operates in Mexico. You are dealing with the concept of - comparative advantage. a. Experts are tested by Chegg as specialists in their subject area. National income will The market wage rate w=1 and price of capital r=4. For example, in 2010, the, A small open economy trades food and clothing on world markets at prices PTF and PTC. D. using the least costly prod. The value of the aluminum is not directly counted in GDP, but the production of aluminum is included in the value-added method of measuring GDP, Indicate whether each of the following transactions represents the purchase of a final good. For example, in 2017, the mon. Instruction: Your response should be rounded to the nearest whole number. Currency: $1,000 Checking Account Balances: $2,000 Savings Account Balances: $5,000 Small-Denomination T. Define Economy and list all inputs and outputs need 100 words at least. For example, in 2017, the money supply was $240, the price of a cell phone was $7.20, and the economy produced soo cell phones Fill in the missing values in the following table. a. not change GDP or the category under which the spending is counted. \hline \text { TOTALS } & 310 & 4,650 & 18,780 & & 29,760 \\ A break-even level of production. What do you suppose determines the, Suppose the marginal product of labor is 10 and the marginal product of capital is 8. b, Indicate on a graph of the circular flows in the market economy, the real and money flows in which the following items belong: a. If the wage is $10 and the rental rate on capital is $20, the short run marginal cost is _____. On payday, he immediately goes out and buys all the goods he will need over the next two weeks in order to prevent the money in his wallet from losing value. Rajiv manages a grocery store in a country experiencing a high rate of inflation. Since cell phone output did not change from 2017 to 2018 and the velocity of money the change in the money supply was reflected In changes in the price level. Nominal GDP can increase if output falls and prices rise. We reviewed their content and use your feedback to keep the quality high. selecting the answers closest to the values you calculate. 1) If year 2 is the base year, the value for this economy's real GDP in year 3 is? Suppose that John, April, and Tristan have two production plants for producing orange juice. Which of the following st, Quantecon is a country in which the theory of money operates. Draw a graph of the money market to illustrate the effect of the Fed purchases government, Consider the following information describing a closed economy with no government and where aggregate output is demand determined 1. the equilibrium condition is Y = C + I 2. the marginal propensity, Refer to the table above, Consider a simple economy with two countries, the United States and India. It can produce two goods, apples and bananas. B. more labor and less capita, Suppose a firm's production function is given by the equation Q = 12L^.5K^.5 . Make sure to label both axis and include a dot on the curve that represents our state of economy. Inflation refers to the increase in the price of the goods and services in an economy during a year. Consider a simple economy that produces only pies. Assume that there are two sectors, manufacturing and farming. They have a total of 850 crates of oranges. M=money supply, V=velocity, P=price level, Y=real output, k=1/V If in year, The determinants of aggregate supply: are consumption, investment, government, and net export spending. In the long run, capital and labor are both varia, The "minimum efficient scale" of operation in an industry is defined as: A) the smallest plant size that can be operated by firms in the industry. Show more Business Economics Answer & Explanation Solved by verified expert Show how to think about them using the IS curve: i.e. Assume the following production possibilities data are for a small country off the coast of South America. Understand how to use the inflation rate formula through examples. Year Quantity of money Velocity of money Price level Quantity of output Nominal GDP (Dollars) (Dollars) (Cell phones (Dollars) 2017 240 15 7.20 500 3,600 , Consider a simple economy that produces only cell phones. 2.0; 4.5; ____; ____; ____; Explain your graph. Decrease When a significant fraction of domestic production takes place in foreign-owned facilities, a country's difference between GDP and GNP is as follows: Which of the following would be included in the gross national product (GNP) of the United States? With no changein aggregate demand, how does the economy return to full employment? Even if GDP included these types of production, why would it still be an imperfect measure of economic well-being? c) how many workers to hire. Derive the base-year-quantity price index. (less than), Consider the following simple economy that produces only three goods: Show the effect this will have on national income, unemployment, inflation, and interest rates with the help of an ADAS diagram, assumi, An economy has a recessionary gap. How do you know? Aggregate supply describes a relationship between? Table: Inflation Rate (%); Real Interest Rate (%); Nominal Interest Rate (%); After-Tax Nominal Interest Rate (%); After-Tax Real Interest Rate (%) The Gross Domestic Product evaluates general production in the economy. Select all that apply. Textbooks 15 90 20 100, Real GDP in 2009 equals $6680. The money supply grew at a rate of __________ (5%/105%/2.44%/1.44%) from 2011 to 2012. Derive the short run, Economic theory suggests that as plant size increases, the average cost of production should fall. From the following data, construct an expenditure schedule on a piece of graph paper. B) For what values of labor does increasing marginal product exist? Which of the following statements is CORRECT? Fill in the missing values in the following . Is the value of intermediate goods and services produced during the year included in Gross Domestic Product (GDP)? RaceandSexwhite,malewhite,femaleblack,maleblack,femaleallothersTOTALS1142108010031015243,360580460404,650256413,6103,3801,06027018,780over64TOTALS22,0504,9301,67033029,760. You have 3 workers: worker A, B, and C. Worker A can produce 4 tables or 8 chairs in one day. Get access to this video and our entire Q&A library, What Is Inflation Rate? B. 9.5; 4.5; ____; ____; ____; Inflation-induced tax distortions If the equilibrium quantity of airplanes demanded is 100, can this economy take full advantage, Based on the Ricardo model, there is gain from trade because A. all things are produced by the most productive workers. GDP would be much higher than it is, but the well-being of the typical person would not necessarily be higher. Graph the PPC for both Countries. An artist buys scrap metal from a local steel mill as a raw material for her sculptures. a) Illustrate and explain what happens to the Economy over time and in the long-run if it ex, Using the data below, find the next set of question: a. a. What is the optimal labor demand in the short run? Assume the market pr, Consider the case of Thailand, a small open economy that faces constant goods prices. If the GDP deflator in 2012 has a value of 98.0, then. B. fully employing all economic resources. The marginal propensity to, Consider the following simple economy that produces only three goods: Real GDP in 2009 equals 000 Base Year 2009 Product Quantity Price Quantity Price Denim pants 80 $40 100 $50 Wine 90 11 80 10 Textb. The equilibrium condition is Y = C+ I 2. For example, in 2011, the money supply was $280, the price of a cell phone was $7.00, and the economy produced 600 cell phones. The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). A. GDP deflator = Nominal GDP / Real GDP 100. The following table contains information on the economy's money supply, velocity of money, price level, and output. prices have decreased 2 percent between the base year and 2012. What he can't spend, he converts into a more stable foreign currency for a steep fee. Kate's factory has low fixed costs and high variable costs. People save 20% of their income, so their savings rate s = 0.20, In a certain economy, the components of aggregate spending are given by: C = 100 + 0.9(Y - T) - 500r I = 150 - 1,000r G = 200 NX = 50 T = 100 Given the information about the economy above, the immedi, Assume a specific-factors economy produces two goods, cloth and food, and that when representing the output of this economy graphically, cloth is on the x-axis and food is on the y-axis. A) What is the value of beef produced in our econom, Consider a firm with short-run production function Q = K + L. Right now, the firm has 10 units of K, w = 3, and r = 10. The following table contains information on the economy's money supply, velocity of money, price level, and output. Many U.S. citizens currently work in foreign countries while few foreign citizens currently work in the U.S. \\ Use the e. Consider a simple economy that produces only pies. The following table shows two scenarios: a low-inflation scenario and a high-inflation scenario. Gopher Excavators produces shovels in a small factory and sells the shovels in a perfectly competitive market. The inflation rate from 2011 to 2012 was __________ (5%/2.44%/1.44%/105). The following table contains information on the economy's money supply, velocity of money, price level, and output. \\ The following table contains information on the economy's money supply, velocity of money, price level, and output. |Year|Price of Meat|Price of a Toy |2004|$3 per pound|$2 |2005|$1 per pound|$7 |2006|$4 per pound|$5 Refer to table.
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