Consider the following data on real GDP per capita in:

a) Calculate the percentage growth rates in real GDP per capita in each of the years 2011 through 2014, from the previous year.

b) Now, instead of calculating the annual percentage growth rates in the years 2011 through 2014 directly, use as an approximation

100×logyt-logyt-1

where yt is real per capita GDP in year t. How close does this approximation come to the actual growth rates you calculated in part (a)?

Explain what ‘consumer surplus” and “producer surplus” are , and why they are important concepts

Let us assume a 2x2x2 model (country H & F, good A & B, factors L & K).

The two countries are identical except L < L* and K > K*

More over good A is labor intensive and good B is capital intensive

(a) Now suppose the relative demand for good A (Rd) is NOT identical in H and F. Rather at each relative world price of good A, the H country’s relative demand for good A (Rd) is way smaller than that of country F. In this case show the autarky prices using a graph with world relative supply and relative demands and show the direction of trade.

how context is important in project management?

3. If the government were to reduce income taxes, how would the reduction affect output and the price level in the short run? In the long run? Describe how the aggregate supply and aggregate demand curves would be affected?

Comment on the government’s budget. How did it change after the increase in government purchase?

TRUE OR FALSE
a. When potential real GDP is equal to actual real GDP, there is no unemployment.
b. A significant increase in wages will shift aggregate supply curve to the right in the short run.
c. When the government decided to reduce their spending, then the aggregate supply curve will decrease or shift to the left in the short run.
d. If the central Bank wants to expand aggregate demand, it can increase the money supply, which would increase the interest rate.
e. To find spending multiplier, we have to calculate one divided by marginal propensity to consume.

Explain why true and why false!

How did “free market fundamentalism” contribute to the US/global financial crisis of 2008? How do the makers of the film The Inside Job criticise public and private actors in this crisis? What role did the US state play (or refused to play) in this crisis? Why? Can you draw parallels between this crisis and the 1997-98 East Asian crisis?

In the movie Forest Gump, Consider the barriers to entry facing potential competitors in Forrest’s monopoly market ( his shrimp boat). The more contestable a market, the closer it will be to a perfectly competitive market, whereas the less contestable a market, the closer it will be to a monopoly.

Define and defend your own position on the University of Texas/Texas A& M admissions policy of granting admission to the Top 7-8% of students from Texas High Schools.

World oil prices have been rapidly swinging over the last few years, in part because of the declining value of the U.S. dollar, changes in supply and demand, and OPEC’s attempts to manage output in order to maintain higher prices. (OPEC stands for the Organization of Petroleum Exporting Countries)

As the president of an oil producing and exporting company in Alberta:

• Explain how you may use hedging to protect your company’s income.
• Share a recent publication with your fellow students and your instructor.

5. Assume that the reserve requirement is 5 percent. All other things being equal:

Will the money supply expand more if the Fed buys $2,000 worth of bonds or if someone deposits in a bank $2,000 that he had been hiding in his cookie jar?

If one creates more, how much more does it create?

6. Assume that the banking system has total reserves of $100 billion. Assume also that required reserves are 10 percent of checking deposits and that banks hold no excess reserves and households hold no currency.

What is the money multiplier? _______What is the money supply? $__________

1. Draw a correctly labeled graph showing a long-run average cost curve.  Label the sections showing economies of scale, diseconomies of scale and constant returns to scale.   Explain economies of scale, constant returns to scale, and diseconomies of scale.

Multiple Choice

1. In the long run:
   1. All inputs can be varied.
   2. No inputs can be varied.
   3. Only variable inputs can be varied.
   4. Only fixed inputs can be varied.
   5. A limited number of inputs can be varied.
2. Sunk costs:
   1. Are costs that can be recovered when production is halted.
   2. Are costs that should be not ignored in future decisions.
   3. Are costs that should be ignored in future decisions.
   4. Are incurred in the short run only.
   5. Are costs of production that reoccur.
3. If the LRATC is falling the firm is experiencing:
   1. decreasing AVC.
   2. constant returns to scale.
   3. economies of scale.
   4. diseconomies of scale.
   5. cost minimization.
4. If the LRATC is rising the firm is experiencing:
   1. increasing AVC.
   2. constant returns to scale.
   3. economies of scale.
   4. diseconomies of scale.
   5. cost maximization.