Econ 214 Exam 1 Complete Solutions Correct Answers Key

Question 1 for an average month in 2019, five years hence, assuming that volume is

25. Think about the backward-bending part of the labor supply curve. Why would someone work less as a result of a higher wage rate?

The labor force participation rate is simply the percentage of the working-age population that is is the labor force, this rate is found by dividing the labor force number by working-age population and then multiplying it by 100 for a nice rounded number. The employment-population ratio is the percentage of the working-age population that is employed, that ratio is found by taking the number of employment and dividing it by the working-age population. While both the labor force participation rate and the employment population ratio can seem very similar one is simply how many people can work in the working-age and how many are actually working. Labor force participation rate is how many could be potentially working and the employment population ratio is the number of people in that are actually working. The overall trend found in the labor force participation rate is simply not changing meaning that the same number of people in the labor force is increasing but so is the working-age population preventing anything to change as the number simply rise and fall together or do not change at all.

The annual US GDP growth rate over the past 10-year period is 3.6957% using the Geometric average that takes into account compounding, while the arithmetic average is 3.7191% in which compounding is not included. To get the most accurate growth rate, the geometric mean should be the best approach to get the most accurate, because each year is dependent of past years. Since the GDP has negative growth it’s also another reason why the geometric average should be used.

Consider an economy that produces and consumes bread, coffee, and automobiles. In the following table, we have data for two different years. The first 2 questions refer to this table. Year 2007 Year 2008 $20,000 $21,000 $1.25 $1.50 $2.00 $2.10 100 120 100,000 115,000 400,000 380,000

(10 points) What will be the expected changes to GDP in the next year? Explain by giving details about the impacts, if any, on C, I, G, and NX. Discuss the impact on real GDP vs. nominal GDP.

John’s nominal wage was $100,000 in 2014 and is $105,000 in 2015, but inflation has risen by 5%, then john’s $105,000 in 2015 buys what $102,941 would have in 2014. This gives rise to the time

For different purpose, the different GDP frames will be used. “Real GDP is the value of final goods and services produced in a given year when valued at the prices of a reference base year; Nominal GDP is the value of final goods and services produced in a given year when valued at the prices of that year. The maximum level of real GDP that can be produced while avoiding shortages of labour, capital, land and entrepreneurial ability that would bring rising inflation is called potential GDP (McTaggart, Findlay & Parkin, 2012).” In this essay, GDP stands for real GDP, and real GDP can be calculated by either the expenditure approach or the income approach. In this essay, the expenditure approach will be used. Aggregate expenditure describes the relationship between total consumption and national income. It can be calculated with a formula: AE = C + I + G + NX. In this formula, the C stands for household consumption, the I stands for investment expenditure, the G stands for government expenditure and the NX stands for net export expenditure. The change of these components will eventually affect real GPD. The expenditure approach is important because it can tell the government of consumers’ demand so that the government can better allocate resources. It can also convey the economic situation signals to the central bank to help them to carry out macroeconomic regulation and control. The figure 1 below shows the aggregate expenditure

Your response Exercise 5-1 Fixed and Variable Cost Behavior [LO1] Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22. Requirement 1: Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round average cost per cup of coffee to 3 decimal places. Omit the "$" sign in your response.) 2,000 Fixed cost Variable cost Total cost Average cost per cup of coffee served $ $ $

c. Given your answer to part b and the information in the table, what do you think is the relationship between the level of involuntary unemployment and the level of the minimum wage? Who benefits from such a policy and who loses? What is the missed opportunity here? (20 points)

D) changes in the number of workers. 17) The level of real GDP in the long run is called A) potential GDP. B) short run GDP. C)

In the following analysis I will examine three establishments including Meijer, Walmart, and the local IGA in my hometown Beaver, Ohio. At each respective grocery store I will find and compare the prices of the top ten items on my average grocery list. The items in question are the following: Gallon of 2 percent milk, one loaf of wheat bread, a six pack of Diet Coke, pepperoni, Purex laundry detergent, one Lean Cuisine, a 24 pack of water, Nutri-Grain granola bars, pre-packaged baby spinach, and Minute Maid orange juice.

We are in the 4th quarter of 2014 and the year started with a decreased real GDP of 2.1%, followed by a growth of 4.6% in the 2nd and 3.9% in the 3rd quarter.

7. Use the AA-DD model to illustrate how the economy adjusts to an increase in

Report the real GDP for the most recent quarter (2nd quarter of 2017). Also report the consumption, investment, government and net exports components of real GDP in dollar terms. Did GDP grow or shrink in the 2nd quarter of 2017 compared to the 1st quarter?