Economics 5

Topic: Economics 5

Order type: Coursework

answer all questions as labeled and numbered;

Chap 29 QUEST 8 and 15

8. How does technological change benefit firms? Does it benefit workers?

15. Demonstrate how a minimum wage affects the unskilled labor market.

Chap 30 Quests 8 and 15

8. Suppose the price elasticity of demand for stocks is 1.5. This means that for every 10 percent increase in stock prices, the quantity demanded will decline by 15 percent. Does this price elasticity make sense? Explain.

15. What led to the rise in housing prices after 2001? Was this a housing bubble?

Chap 5 Quests 3 and 13

3. Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4
a. What is the growth rate of constant-dollar real GDP using year 1 as the base year?
b. What is the growth rate of constant-dollar real GDP using year 2 as the base year?

13. Why has nominal GDP increased faster than real GDP in the United States over time? What would it mean if an economy had real GDP increasing faster than nominal GDP?


Chap 6 Quests 3, 8 and 15

3. The U.S. dollar price of a Swedish krona changes from $.1572 to $.1730.

a. Has the dollar depreciated or appreciated against the krona?
b. Has the krona appreciated or depreciated against the dollar?

Use the information in the following table on Mexico’s 2007 international transactions to answer exercises 4–6 (the amounts are the U.S. dollar values in millions):
Merchandise exports $271,594
Merchandise imports $281,649
Services exports $ 17,512
Services imports $ 23,784
Income receipts $ 7,972
Income payments $ 26,036
Unilateral transfers $ 24,197

4. What is the balance of trade?
5. What is the current account?
6. Did Mexico become a larger international net debtor during 2007?

8. How did the United States become the world’s largest debtor nation in the 1980s?

15. Use the national income identity GDP = C + I + G + X to explain what a current account deficit (negative net exports) means in terms of domestic spending, production, and borrowing.

Chap 7 Quests 12-13

12. Suppose 500 people were surveyed, and of those 500, 450 were working full time. Of the 50 not working, 10 were full-time college students, 18 were retired, 5 were under 16 years of age, 7 had stopped looking for work because they believed there were no jobs for them, and 10 were actively looking for work.
a. How many of the 500 surveyed are in the labor force?
b. What is the unemployment rate among the 500 surveyed people?

13. Consider the following price information:

Year 1 Year 2
Cup of coffee $ .50 $1.00
Glass of milk $1.00 $2.00

a. Based on the information given, what was the inflation rate between year 1 and year 2?
b. What happened to the price of coffee relative to that of milk between year 1 and year 2?
Chap 11 Quests 7

7. How can a larger government fiscal deficit cause a larger international trade deficit?

Chap 34 Quests 2-6

1. Why must voluntary trade between two countries be mutually beneficial? Use the following table for exercises 2– 6.
Amount of Beef or Computers Produced by One Worker in a Day

Canada Japan
Beef 8 5
Computers 3 4

2. Which country has the absolute advantage in beef production?
3. Which country has the absolute advantage in computer production?
4. Which country has the comparative advantage in beef production?
5. Which country has the comparative advantage in computer production?
6. What are the limits of the terms of trade? Specifically, when is Canada willing to trade with Japan, and when is Japan willing to trade with Canada?

Chap 35 Quests 3 and 9

3. Tariffs and quotas both raise the price of foreign goods to domestic consumers. What is the difference between the effects of a tariff and the effects of a quota on the following?
a. The domestic government
b. Foreign producers
c. Domestic producers

9. How would the effects of international trade on the domestic orange market change if the world price of oranges were above the domestic equilibrium price? Draw a graph to help explain your answer.

Chap 36 Quests 13-15

13. “You are a U.S. importer who buys goods from many different countries. How many U.S. dollars do you need to settle each of the following invoices?

a. 1,000,000 Australian dollars for wool blankets (exchange rate: A$1 = $.769)
b. 500,000 British pounds for dishes (exchange rate: £1 = $1.5855)
c. 100,000 Indian rupees for baskets (exchange rate: Rs1 = $.0602)
d. 350 million Japanese yen for stereo components (exchange rate: ¥1 = $.0069)
e. 825,000 Euros for German wine (exchange rate: E1 = $1.05)

14. What is the dollar value of the invoices in exercise 13 if the dollar:

a. depreciates 10 percent against the Australian dollar
b. appreciates 10 percent against the British pound
c. depreciates 10 percent against the Indian rupee
d. appreciates 20 percent against the Japanese yen
e. depreciates 100 percent against the euro

15. Explain purchasing power parity and why it does not hold perfectly in the real world.