Expert answer:Economics Homework – assignment
Answer & Explanation:Macroeconomics: Assignment # 1
1. Define Economics. Distinguish between Microeconomics and
Macroeconomics.
2. State against each of the following sentences whether
they belong to micro or macro economics:-
a)
The U.S. GDP
registered a growth rate of 1.8% in 2013.
b)
The U.S.
unemployment rate stood at 6.7% in Dec. 2013.
c)
Compared to Fall 2013, in Spring 2014, the student enrollment at
MSU increased by 5%.
d)
In 2013, the U.S. inflation rate was 1.5%.
e)
Castle Toyota, a car
dealer, retrenched 5 of its workers in Jan. 2014.
f)
Adverse weather
conditions damaged the tomato output and raised its price.
3. What are the goals of macroeconomic policies?
4. What were the factors that led to the civil war?
5. Discuss briefly the causes and consequences of the great
depression?
6. Write short notes on:
a)
The great expansion
b)
The great recession
c)
Kennedy Tax Cuts
d)
Business Cycle and
its different phases
e)
Stagflation
7. List 5 factors that contributed to the emergence of
U.S.A, as the largest economy of the world.
8. What are the key economic problems? How are they
addressed by different economic systems?
9. Alice has $100 to spend on CDs and DVDs. A CD costs $10,
and a DVD costs $20.
a)
Construct an
opportunity set.
b)
Draw a budget line
with DVDS measured along the horizontal axis.
c)
Find the slope of
the budget line.
d)
If Alice has more
money to spend what will happen to the budget line?
e)
If the price of the
DVD falls to $10 a piece, what will be the slope of the new budget line?
10. John purchases apples and oranges. Price per lb of
apples and oranges are $2 and $1
respectively.
If
John measures apples along the horizontal axis, what will be the slope of his
budget line?
11. A country has the following production possibilities:
Type of goods
Production
Possibilities
A B C D E
0 5 10 15 20
10 9 7 4 0
Consumer goods
Capital goods
If the country is at point C, what is the opportunity
cost of producing an extra unit of
a)
Capital good
b)
Consumer good
c)
How will further
increase in the production of capital/consumer goods affect the opportunity
cost?
12. Account for the law of increasing opportunity costs.
13. a) What is
demand?
b)
State the law of
demand.
c)
Draw a demand curve?
d)
What do movement along
the demand curve and shift in demand curve indicate?
e)
List four factors
that cause shifts in the demand curve?
14. What will be the effect of each of the following on
demand for SUVs:-
a)
SUVs become more
popular.
b)
Gas price
substantially increases.
c)
A recession hits the
country.
d)
Newspapers report
large number of fatal accidents involving small cars.
15. a) What is
supply?
b) State the
law of supply.
c) Draw a
supply curve.
d)
What do movement
along the supply curve and shift in supply curve indicate?
e)
List four factors
that cause shifts in the supply curve?
16. What will be the effect of the following on supply of
auto tires?
a)
A technological
advance in the method of producing tires.
b)
An increase in the
price of rubber.
c)
Levying of a per unit
tax on tires.
d)
Expected fall in
tire prices.
17. Wheat
Market
Thousands
of bushels demanded
Price
per bushel ($)
Thousands
of bushels supplied
Amount
of Surplus(+)/Shortage(-)
90
3
50
80
4
60
70
5
70
60
6
80
a) What is the equilibrium price?
b) What is the equilibrium quantity?
c) At a price of $3 per bushel, what will be the surplus/
shortage? What will be its consequence on price?
d) At a price of $6 per bushel, what will be the surplus/
shortage? What will be its consequence on price?
18. If Qd = 6-P, and Qs=
-2+P, find the equilibrium price and
quantity.
19.
What does happen to the housing market when rent control is imposed?
Show with a diagram.
20. Draw a circular flow of income diagram, and
explain its various flows.
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