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

Suppose that, in the basic one-period model, there is no government spending and no taxes. Production by the representative firm produces pollution in proportion to the amount of output produced. Given any consumption bundle (a consumption-leisure pair), the consumer is worse off the more pollution there is.

(a) In a diagram, show the competitive equilibrium and the Pareto optimum. Show that the competitive equilibrium is not Pareto optimal, and explain why. Is more or less output produced in the competitive equilibrium than at the Pareto optimum? Explain.

(b) Now, suppose that the government imposes a proportional tax t on the output of the firm, and rebates the proceeds of the tax on a lump-sum fashion, as a transfer TR to the representative consumer. Show that the tax can be set in such a way that the competitive equilibrium is Pareto optimal. Explain your results.

Assume that a customer shops at a local grocery store spending an average of ​$150 a​ week, resulting in the retailer earning a ​$25 profit each week from this customer. Assuming the shopper visits the store all 52 weeks of the​ year, calculate the customer lifetime value if this shopper remains loyal over a​ 10-year life-span. Also assume a 4 percent annual interest rate and no initial cost to acquire the customer.

This customer yields ​$1300 per year in profits for this retailer. ​(Round to the nearest​ dollar.)

The customer lifetime is ​$_______. (Round to the nearest​ dollar.)

1. If we increase government spending on education and infrastructure how will this impact AD/AS in the

a) Classical Model

b) Keynesian Model

c) Supply-side Model

1.Which of the following would not be included in an economist's definition of investment spending?

2. A decrease in the demand for peanut butter could be caused by a(n)

3. Which of the following would indicate the beginnings of an expansion of the economy?

4. To determine the CPI, you would need to know the

14. Suppose the economy is in long-run equilibrium. If there is an expansion of government spending at the same time that a significant increase in immigration of skilled workers reduces production costs, then in the short-run we would expect
A. real GDP will fall and the price level might rise, fall, or stay the same.
B. real GDP will rise and the price level might rise, fall, or stay the same.
C. the price level will fall, and real GDP might rise, fall, or stay the same.
D. the price level will rise, and real GDP might rise, fall, or stay the same.
E. Either A or C will occur.
15. According to the AD/AS model, which of the following statements is (are) correct?
(x) Stagflation occurs if the economy experiences both an increase in prices and a reduction in output.
(y) Stagflation occurs if the aggregate supply curve shifts to the left because prices rise and output falls.
(z) An increase in the price level with a corresponding reduction in real GDP could be created by natural disasters such as floods, hurricanes and unusually dry weather
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

12. Suppose the economy is in long-run equilibrium. If there is an increase in consumer spending due to a tax rebate at the same time that a natural disaster adversely affects the availability of production inputs within the country, then in the short-run we would expect
A. the price level will rise, and real GDP might rise, fall, or stay the same.
B. the price level will fall, and real GDP might rise, fall, or stay the same.
C. real GDP will fall and the price level might rise, fall, or stay the same.
D. real GDP will rise and the price level might rise, fall, or stay the same.
E. the price level might rise, fall or stay the same and real GDP might rise, fall, or stay the same.
13. Suppose the economy is in long-run equilibrium. If there is a significant consumption (sales) tax increase at the same time that major new sources of oil are discovered in the country, then in the short-run we would expect
A. real GDP will fall and the price level might rise, fall, or stay the same.
B. real GDP will rise and the price level might rise, fall, or stay the same.
C. the price level might rise, fall or stay the same and real GDP might rise, fall, or stay the same.
D. the price level will rise, and real GDP might rise, fall, or stay the same.
E. the price level will fall, and real GDP might rise, fall, or stay the same.
14. Suppose the economy is in long-run equilibrium. If there is an expansion of government spending at the same time that a significant increase in immigration of skilled workers reduces production costs, then in the short-run we would expect
A. real GDP will fall and the price level might rise, fall, or stay the same.
B. real GDP will rise and the price level might rise, fall, or stay the same.
C. the price level will fall, and real GDP might rise, fall, or stay the same.
D. the price level will rise, and real GDP might rise, fall, or stay the same.
E. Either A or C will occur.

1.

Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. Then the consumption function is given by

2.

Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. At what level of income is saving = 0?

3.

The saving function

Assume that a customer shops at a local grocery store spending an average of ​$400 a​ week, resulting in a retailer profit of ​$40 each week from this customer. Assuming the shopper visits the store all 52 weeks of the​ year, calculate the customer lifetime value if this shopper remains loyal over a​ 10-year life span. Also assume a 3 percent annual interest rate and no initial cost to acquire the customer. The customer yields ​$ nothing per year in profits for this retailer. ​(Round to the nearest​ dollar.)