7. “A decrease in the price of crude oil leads to an increase in total spending on gasoline.” Is the demand for gasoline elastic or inelastic? Explain in detail with a diagram.

8. Suppose income goes down. Draw a diagram where X is a normal good and Y is an inferior good.

9.Suppose income goes down. Draw a diagram where X is an inferior good and Y is a normal good

1. an increase in government spending will have a greater effect on aggregate output if ______. Check all correct choices
= the economy begins to trade
= the resulting increase in the aggregate price level is smaller
= households save less out of every additional dollar of disposable income
= income is taxed at a higher rate

2. if the bank of canada's target for the overnight rate is 1.75% while the actual overnight rate is 1.70%, the appropiate monetary policy for the bank of canada would be to buy government securities in the open market

TRUE
FALSE

3. Which of the following is true?

= an economy's employment rate and level of aggregate output move in opposite directions
= when the number of jobs created by the economy equals the number of people in the labour force. it is normal to have some unemployment
= an economy is said to have full employment when there is no structural or frictional employment
= the unemployment rate may fall, increase or stay the same when the economy is creating more jobs

4. MPS= 0.2 there are no income taxes or transfers, economy does not trade. price level is constant. due to a fall in autonomus investment, real GDP falls from $6,000 million to $5.000 million. the reduction in autonomous investment was equal to???

With over 50% of adults spending more than an hour a day on the Internet, the number experiencing computer- or Internet-based crime continues to rise. A survey in 2010 of a random sample of 1020 adults, aged 18 and older, reached by random digit dialing found 122 adults in the sample who said that they or a household member was a victim of a computer or Internet crime on their home computer in the past year.

What is a 90 % large-sample confidence interval for the proportion p of all households that have experienced computer or Internet crime during the year before the survey was conducted? Using p-hat rounded to 4 decimals:

The 90 % confidence interval (±±0.001) is from  to

When use plus four method the 90 % confidence interval (±±0.001) is from  to

A study conducted by the research department of a pharmaceutical company claims that the annual spending (per person) for prescription drugs for allergy relief,

μ1

, is greater than or equal to the annual spending (per person) for non-prescription allergy relief medicine,

μ2

. A health insurance company conducted an independent study and collected data from a random sample of

225

individuals for prescription allergy relief medicine. The sample mean is found to be

17.5

dollars/year, with a sample standard deviation of

5.7

dollars/year. They have also collected data for non-prescription allergy relief medicine. An independent random sample of

285

individuals yielded a sample mean of

18.5

dollars/year, and a sample standard deviation of

4.3

dollars/year. Since the sample size is quite large, it is assumed that the population standard deviation of the sales (per person) for prescription and non-prescription allergy relief medicine can be estimated by using the sample standard deviation values given above. Is there sufficient evidence to reject the claim made by the research department of the company, at the

0.01

level of significance? Perform a one-tailed test. Then fill in the table below.

Carry your intermediate computations to at least three decimal places and round your answers as specified in the table.

1. What are the problems with ex ante approaches to the study of public spending on sports?

2. With respect to the World Cup and Olympics, what is the economic impact of these events from ex ante and ex post studies?

Tesla is thinking of spending $12,000,000 to automate a production facility. The investment is expected to have the following effects: Automation will increase the capacity of the plant and allow it to boost production and sales by 30 percent. The sales now is $15,000,000 per year, with 15,000 units sold. The company will be able to reduce labor cost per unit by 20 percent. The labor cost per unit now is $30. Factory supervision costs will increase by $500,000 per year. The estimated useful life of the equipment is 5 years, at which point it will have a residual value of $1,000,000. Straight-line depreciation is used.

1. What is the change in net income per year (input 20, if it's an increase for $20)?

2. If the discount rate is 11%, What is the NPV of the automation (please use excel to do NPV calculation, round to 2 decimal places, if -200.893, input -200.89, if 200.893, input 200.89)?

Assume that in​ 2015, the following prevails in the Republic of​ Nurd:

Government spending​ (G) =​ $0

Net taxes​ (T) =​ $0

Planned investment​ (I )​ = ​$ 30

Assume that households of Nurd consume 80 percent of their​ income; they save 20 percent of their income. In other​ words, their MPC​ = .80 and MPS​ = .20 ​Thus, the consumption function and saving function of Nurd​ are:

C​ = .80Y^d and S​ = .20Y^d ​, where disposable income Y^d ​= Y-T

​Currently, the economy of Nurd is in equilibrium. As the leading econometrician of​ Nurd, you have estimated the​ full-employment level of income for the economy to be ​$200.

Calculate the adjustment in government​ spending, if​ any, to achieve full employment in Nurd.

Δ G=

Discuss the pros and cons of reducing spending on these two types of programs relative to stimulating economic growth.

social insurance programs

public assistance programs

If the economy is at full employment, increases in government spending:

A)

have a multiplier effect on equilib

rium output.

B)

have no effect on the aggregate price level.

C)

are primarily absorbed by price increases.

D)

reduce aggregate output

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