Econ

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ECONOMICS 110/112
Assignment #5/#2
2013/2014
Due Dates and Notes:


DUE: By Friday February 28, 2:00 PM. Completed assignments should be placed in the slot marked for your section in the white assignment collection box on the 2nd floor of Dunning Hall. Late assignments will not be accepted.



Use the Cover Page when submitting assignments. Place diagrams for particular questions with your answers to those questions.



Group Work: Maximum four per group, all students must be registered in the same section of the same course. Names must be in alphabetical order on the cover page.



Graded work will be available for pick-up beginning on the afternoon of Friday March 14 in the Econ
Distribution Center, Dunning Hall Room 334. You will require your student card.



This assignment covers material from Chapters 20-24 of the text.

True, False, or Uncertain

[48 marks - 6 marks each]

Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important.
A5-1. Suppose on Feb 2, 2013 an individual pays $350,000 for a new home purchased from a builder who finished building the house on Oct 12, 2012. The transaction includes a sales commission of $20,000. This transaction adds $350,000 to 2013 GDP.
A5-2. The building of Olympic venues in Russia increases both actual and potential GDP in that country.
A5-3. In Saudi Arabia, gross domestic product (GDP) is less than gross national product (GNP). This means that the nation produces domestically more than it is able to consume domestically.
A5-4. If aggregate household saving is negative, the marginal propensity to save from disposable income must be negative. A5-5. If desired aggregate expenditure is greater than actual national output, national output will increase.
A5-6. If the domestic price level decreases, the price of

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