Question

1a) Suppose that GDP is $10,000, Consumption is $6,000, and Government spending is $1,500 with a deficit of $200. (Assume net exports are zero)

What is the level of private saving in this economy?

1,500

2,500

7,200

2,700

b) The population of Scottsdale is 100 people. 40 people work full time, 20 work half time but prefer to work full time, 10 are seeking work, 10 would like to work but are discouraged from seeking, 10 are full time students without a desire to work while in school, and 10 are retired.

What is the unemployment rate?

10%

20%

40%

30%

c) Lately, talks about creating more barriers to trade has contributed to some volatility in the stock market. In this case, short downturns in the market would reflect the fact that firms are unsure about how to make investment plans. This uncertainty in the investment market would tend to _______ investment and _______ interest rates.

raise, lower

raise, raise

lower, raise

lower, lower

d) In the Hans Rosling video discussing the magic washing machine, which of the following points is made?

About half of the world’s energy use is used by the least developed countries

Poor, less developed countries cannot mobilize to improve their standard of living

The washing machine, while valuable, cannot and should not be used by everyone due to energy crisis

One valuable aspect of the washing machine is the time it frees up to engage in other activities, such as learning, which ultimately promotes economic growth

Answer 1