Questions and Answers of Macroeconomics Canada In The Global Environment

Define the natural rate of unemployment and cyclical unemployment. What types of unemployment do they both reflect?
Why does the labor supply curve slope upward and what can cause the labor supply curve to shift?
Change in market wage leads to a shift in the labor demand curve. Is this statement true or false? Explain your answer.
As an economic advisor, you observe that a firm’s total revenue is greater than its total cost. Will you recommend the firm to employ more workers to maximize profits?Explain your answer.
What could explain why unemployment is lower among workers with a relatively higher level of education?
Consider Exhibit 9.2. What were the two highest rates of unemployment since 1948? When did they occur?
Explain whether each of these individuals will be counted as a part of the labor force.a. Jane is working full-time toward a Ph.D. in philosophy but volunteers at nursing homes during her spare
Unemployment statistics are measured and released by the Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor.a. When does the Bureau of Labor Statistics (BLS) officially
Parts of the world that were relatively more prosperous 500 years ago have experienced a reversal of fortune and are relatively poorer today. What factors could explain this?
Based on Schumpeter’s idea of creative destruction, explain why some rulers adopt extractive economic institutions that prevent countries from being wealthy.
Suppose a country has well-enforced private property rights for entrepreneurs, but a large fraction of the population does not have access to education and thus cannot become entrepreneurs. Moreover,
How does the existence of extractive institutions discourage entrepreneurship in an economy?
What does the return-to-entrepreneurship curve show?What is meant by the opportunity cost of entrepreneurship?
How do inclusive economic institutions differ from extractive economic institutions?
What does it mean to say that private property rights are well-enforced in an economy? How does it foster economic development?
Based on the chapter, how does institution hypothesis explain the difference, in terms of economic growth, between North and South Korea?
In the context of this chapter, what is meant by an institution?What are the three important elements that define institutions?
Do you think cultural differences help explain the economic growth in different countries? Give an example to illustrate your answer.
According to the geography hypothesis, what could be done in order to improve incomes in poor countries?
What does the geography hypothesis state?
Why do some countries have more physical capital, higher quality of human capital, and better technology?
What factors explain the dramatic increases in life expectancy that we saw in most countries in the twentieth century?
Based on your understanding of the chapter, how can poverty best be reduced?
Does an increase in GDP per capita of a nation imply that all its citizens have become richer? Explain.
How did the Industrial Revolution affect economic growth?
What did Malthus predict about economic growth? Did his predictions come true? Why or why not?
What is sustained growth? Can physical capital accumulation generate sustained growth? Explain you answer.
What explains economic growth in the United States over the past few decades?
What is the role of human capital in the determination of a country’s GDP?
The chapter emphasizes the importance of saving in economic growth.a. How is the saving rate in an economy defined?b. What factors help households decide whether to consume or save their income?c.
According to the aggregate production function, how does GDP increase?
Although Singapore’s GDP per capita was low when compared with the U.S. in the 1960s, based on Exhibit 7.7, we expect Singapore to catch up with more technologically advanced countries. Why?
Referring to Exhibit 7.5, is the GDP per capita in South Korea likely to draw level with U.S. GDP per capita in the future?
What are the problems of only focusing on income per capita?
Why is the average American so much richer than the average Indian?
What does Moore’s Law state? Is Moore’s Law borne out by historical data?
How do increases in technology affect the aggregate production function?
Explain what distinguishes physical capital from natural resources.
Explain the difference between the terms “physical capital”and “human capital.”
Use the following diagram to explain the relationship between a country’s physical capital stock and GDP.
Use an expression to explain how education improves the efficiency units of labor in an economy.
What are factors of production? What does the aggregate production function describe?
What are the two components of technology?
Suppose that there are two factors of production—physical capital and labor. Given the amount of physical capital stock, explain how additional output produced depends on the existing level of
What is the correlation between income per capita and welfare measures like absolute poverty and life expectancy?What does this suggest about income per capita as a measure of welfare?
A country with a higher GDP must have a GDP per capita that is higher than that of a country with a lower GDP. Is this statement true or false?
Suppose that country A has higher income per capita than country B. Explain why this does not imply that most citizens of country A have higher income than most citizens of country B. Try to
What are the disadvantages of using Big Macs to measure purchasing power parity?
Suppose you are comparing the income per capita in the United States and Ghana. You first convert the values into U.S. dollars using the current exchange rate between the U.S. dollar and the Ghanaian
Would you choose to compute the inflation rate using the Consumer Price Index (CPI) or the GDP deflator? Explain your answer.
Write the formula to compute the inflation rate in year t.
As nominal GDP increases, the quantity of goods and services must increase. Is this statement true or false?Explain your answer.
The income earned by Snowland’s workers in Heatland would be counted in Snowland’s GNP, but not in its GDP.Is this statement true or false?
Explain three important factors that GDP leaves out.
If the level of aggregate expenditure was $16.8 trillion in 2013, what was the level of aggregate income? Explain your answer.
How is each firm’s value added used to estimate GDP? Discuss its role in production-based accounting.
What is an accounting identity? Explain the accounting identity Production 5 Expenditure 5 Income.
How is gross domestic product defined?
What does the Law of Demand state? What is the difference between an individual demand curve and a market demand curve?
What is meant by diminishing marginal benefits? Are you likely to experience diminishing marginal benefits for goods that you like a lot? Are there exceptions to the general rule of diminishing
A firm reported that the total cost of producing 100 units is $20,000 and that the production of 101 units needs a total cost of $20,100. The total cost is composed of fixed and variable costs. The
Assume that your country’s income tax structure has the following tax rates: if your income is $30,000 or less you pay no income tax; if your income is above $30,000, you pay 30 percent of the
Suppose the total benefit and total cost to society of various levels of pollution reduction are as follows:a. Complete column (4).b. Use optimization in levels to show that if the U.S.Environmental
Your total benefits from consuming different quantities of gas each week are shown in the following table.a. Complete the marginal benefit column starting with the step from 0 gallons to 1 gallon per
You are taking two courses this semester, biology and chemistry. You have quizzes coming up in both classes.The following table shows your grade on each quiz for different numbers of hours studying
Determine if the following statements better describe optimization in levels or optimization in differences.a. John is attempting to decide on a movie. He determines that the new Batman movie
When we consume an apple, we can evaluate its total utility as well as its marginal utility.a. Define the concept of marginal analysis in general.b. What is the marginal utility in this case? Why is
Suppose you as a risk-averse individual are making two different decisions: the first is to buy a financial stock, the second is to buy a good to consume. Identify how you would behave in each
What is marginal cost? Explain with an example.
Define optimization in differences and optimization in levels. Do they yield the same result?
Some people choose to live close to the city center; others choose to live away from the city center and take a longer commute to work every day. Does picking a location with a longer commute imply a
What is meant by marginal analysis? Explain with an example.
The consumption function of a household can be expressed by the following equation: C 5 a 1 b I, where I is the income, a denotes a positive number, and b a percentage.a. Is this equation a model?b.
Maimonides, a twelfth-century scholar, said, “Twentyfive children may be put in the charge of one teacher. If the number in the class exceeds twenty-five but is not more than forty, he should have
The chapter shows that in general people with more education earn higher salaries. Economists have offered two explanations of this relationship. The human capital argument says that high schools and
As the text explains, it can sometimes be very difficult to sort out the direction of causality.a. Why might you think that more police officers would lead to lower crime rates? Why might you think
With the fairly recent Internet boom and IT revolution, piracy and plagiarism, among many other things, have increased. Do you think that having stricter cyber laws and censorship preventing the
This chapter stressed the importance of using appropriate samples for empirical studies. Consider the following two problems in that light.a. You are given a class assignment to find out if
The average score for a class of 30 students is 70.The top 20 students in the class averaged at 75.What is the average score of the remaining 10 students in the class?
This chapter talks about means. The median is a closely related concept. The median is the numerical value separating the higher half of your data from the lower half.You can find the median by
What is meant by data? Are data always numerical? How are data used in empirical analysis? Give an example.
What is meant by omitted variable? Give an example to explain this concept.
How is the mean calculated from a series of observations?Suppose 5,000 people bought popsicles on a hot summer day. If the mean of the average number of popsicles bought is 2, how many popsicles were
Explain how economists study the economic behavior of a society empirically. By using hypotheses based on empirical evidence, how are they contributing to the welfare of the society?
This chapter discussed the free-rider problem. Consider the following two situations in relation to the free-rider concept.a. The Taft-Hartley Act (1947) allows workers to be employed at a firm
John can either drive himself to the airport or take a cab.Driving a distance of 20 kilometers to the airport might be exhausting for him, especially since he expects to run into rush-hour traffic.
There is an old saying that “The proof of the pudding is in the eating,” which means that by definition good decisions work out well and poor decisions work out badly.The following scenarios ask
By taking the train, Alain can travel from Paris to Lille in 1 hour. The same trip takes 5 hours by bus. The train costs€80 and the bus €20. When Alain is not traveling he can work and earn €25
Suppose the market for oranges in an economy is displaying an equilibrium price of $2 per kilogram. Based on this situation, what is your understanding of optimization?
You are thinking about buying a house. You find one you like that costs $200,000. You learn that your bank will give you a mortgage for $160,000 and that you will have to use all of your savings to
In an episode of the sitcom Seinfeld, Jerry and his friends Elaine and George are waiting to be seated at a Chinese restaurant. Tired of waiting, Elaine convinces the others that they should bribe
Identify cause and effect in the following examples:a. Lower infant mortality and an improvement in nutritionb. A surge in cocoa prices and a pest attack on the cocoa crop that year
“Scarcity exists because people have unlimited wants in a world of limited resources.” Explain this statement by giving a real-life example.
This chapter introduced the idea of opportunity cost.a. What is meant by opportunity cost? How are the opportunity costs of various choices compared?b. What is the opportunity cost of taking a year
How is the discussion of the impact of an increase in the demand for Samsung mobile phones produced in South Korea different in microeconomics and macroeconomics?
Examine the following statements and determine if they are normative or positive in nature. Explain your answer.a. The U.S. automotive industry registered its highest growth rate in 5 years in 2012;
What is meant by monetary policy? What monetary measures are used to control business cycle of depressionary nature? Which measure is more effective in a developing economy?
What is meant by counter-cyclical fiscal policy? Suppose an economy is faced with the problem of inflation with economic expansion.What kind of counter-cyclical fiscal policy will you recommend and
What is meant by built–in flexibility? How does it help in stabilizing the economy?
What is meant by the sub-prime crises? How did the sub-prime crisis lead to economic recession in the US? How did the US economic crisis turn into the global crisis?

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