Practice for Midterm # 1
Problem # 1
"When the price of a resource used to produce a product increases, the firm increases its supply, therefore shifting the supply curve rightward." Is this statement true or false? Explain your answer. Problem # 2
Suppose the market for running shoes is in equilibrium. Then the supply of running shoes decreases. What happens to the price and quantity of running shoes? What factors might account for the decrease in supply? Problem # 3
The table above gives the demand and supply schedules for CDs. a. According to the table, what is the equilibrium price?
b. Suppose the government imposes a price floor of $16 for a CD. What is the result? c. Suppose the government imposes a price ceiling of $8 for a CD. What is the result? Problem # 4
If you sell your textbook to your friend this year, does the sale count in this year's GDP? Problem # 5
Assume a small nation has the following statistics: its consumption expenditure is $15 million, investment is $2 million, government expenditures on goods and services is $1 million, exports of goods and services to foreigners is $1 million, and imports of goods and services from foreigners is $1.5 million. Calculate this nation's GDP. Problem # 6
The table above gives data on the production and prices in a small economy. Use 2006 as the base period. a.What does nominal GDP equal in 2006?
b.What does real GDP equal in 2006?
c.What does nominal GDP equal in 2007?
d. Using the chained-price method, what does real GDP equal in 2007? Problem # 7
The table above shows real and nominal GDP for two years.
a. What does the GDP deflator equal in 2006? What does the value of the GDP deflator tell you about 2006? b. What does the GDP deflator equal in 2007?
Problem # 8
"If country A has a higher level of real GDP per person than country B, then people in Country A must enjoy a higher standard of living than people in Country B." Is this statement true...
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