Question 1

Describe and discuss the two explanations of the Great Recession?

Accepted Answer

The Minsky

Question 2

What will happen to prices and output levels if there is an unexpected decrease in demand and prices are fully flexible?

Accepted Answer

In this instance, output is fixed and only prices change.With a demand increase and output fixed, prices will necessarily fall.

Question 3

What is modern economic growth?

Accepted Answer

Modern economic growth is the relatively recent phenomenon of steadily increasing real GDP per capita.

Question 4

In order to compare GDP across nations, economists typically make 3 adjustments.What are these adjustments and why are they carried out?

Accepted Answer

First, currencies are converted to a com

Question 5

In order to grow, what must a country do?

Accepted Answer

Economic growth requires that

Question 6

What is the difference between nominal and real GDP?

Accepted Answer

The GDP measures all final goods and ser

Question 7

Define macroeconomics and provide two key concerns it studies.

Accepted Answer

Macroeconomics studies the behaviour of

Question 8

"Most prices are not that sticky." Evaluate this claim.

Accepted Answer

While some prices like retail gas change

Question 9

Suppose that we are in a condition of fully flexible prices, but production of nails will not go above 6,000 kg/week.What price will nails sell for if market demand is characterized by: (a) P = 5 - 0.5Q, (b) P = 6 - 0.5Q, and (c) P = 4 - 0.5Q, where P is in $/kg and Q is in thousands of kg/week?

Accepted Answer

(a) P = 5 - 0.5(6), P = 5 - 3,

Question 10

Suppose that we are in a condition of "stuck" prices so that the price of nails will not go above or below $2/kg.Further suppose that nail factories have been built on a business plan designed to deliver 6,000 kg/week.How many nails will be sold in a market in which demand (which includes a modest amount of inventory) is characterized by: (a) P = 5 - 0.5Q, (b) P = 6 - 0.5Q, and (c) P = 4 - 0.5Q, where P is in $/kg and Q is in thousands of kg/week? In each case, what happens to inventory.

Accepted Answer

(a) At $2/kg we get 2 = 5 - 0.5Q, -3 = -

Question 11

If households are typically the source of savings and businesses the source of investments, how then are savings and investments coordinated?

Accepted Answer

Banks and other financial inst

Question 12

What will happen to prices and output levels if there is an unexpected demand increase and prices are fully flexible?

Accepted Answer

In this instance, output is fi

Question 13

Describe and discuss two economic solutions to solve the Great Recession.

Accepted Answer

The Stimulus Solution The majority of ec

Question 14

What are two reasons why prices might be sticky?

Accepted Answer

First, consumers prefer stable and predi

Question 15

What three key statistics do macroeconomists study to assess the health of the economy? Give a short explanation of each.

Accepted Answer

Macroeconomists study real gross domesti

Question 16

Suppose that we are in a condition of "stuck" prices so that the price of wooden chairs will not go above or below $125/unit.Further suppose that chair factories have been built on a business plan designed to deliver 200/month.How many chairs will be sold in a market in which demand (which includes a modest amount of inventory) is characterized by: (a) P = 425 - 1.5Q, (b) P = 530 - 1.5Q, and (c) P = 400 - 0.5Q, where P is in $/chair and Q is in chairs/month? In each case, what happens to planned inventory.

Accepted Answer

(a) At $125/chair we get 125 = 425 - 1.5

Question 17

In this list, identify those investments which are financial (F) and those that are economic (E): Canada Savings Bonds, stock in Potash Corporation of Saskatchewan, an old house you plan on fixing and reselling, new machinery for a factory you own, land that you plan to develop, an old window factory, your university education.

Accepted Answer

Canada Savings Bonds (F), stock in Potas

Question 18

Suppose that we are in a condition of fully flexible prices, but production of nails will not go above 200 chairs/month.What price will chairs sell for if market demand is characterized by: (a) P = 425 - 1.5Q, (b) P = 530 - 1.5Q, and (c) P = 400 - 0.5Q, where P is in $/chair and Q is in chairs/month?

Accepted Answer

(a) P = 425 - 1.5(200), P = 42

Question 19

What is GDP per capita?

Accepted Answer

It is GDP divided by

Question 20

What are two broad categories of macroeconomic shocks?

Accepted Answer

In macroeconomics, shocks are categorize

Exam 6: Part A: An Introduction to Macroeconomics

Describe and discuss the two explanations of the Great Recession?

What will happen to prices and output levels if there is an unexpected decrease in demand and prices are fully flexible?

What is modern economic growth?

In order to compare GDP across nations, economists typically make 3 adjustments.What are these adjustments and why are they carried out?

In order to grow, what must a country do?

What is the difference between nominal and real GDP?

Define macroeconomics and provide two key concerns it studies.

"Most prices are not that sticky." Evaluate this claim.

Suppose that we are in a condition of fully flexible prices, but production of nails will not go above 6,000 kg/week.What price will nails sell for if market demand is characterized by: (a) P = 5 - 0.5Q, (b) P = 6 - 0.5Q, and (c) P = 4 - 0.5Q, where P is in $/kg and Q is in thousands of kg/week?

If households are typically the source of savings and businesses the source of investments, how then are savings and investments coordinated?

What will happen to prices and output levels if there is an unexpected demand increase and prices are fully flexible?

Describe and discuss two economic solutions to solve the Great Recession.

What are two reasons why prices might be sticky?

What three key statistics do macroeconomists study to assess the health of the economy? Give a short explanation of each.

What is GDP per capita?

What are two broad categories of macroeconomic shocks?

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part B: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

Part B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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