1. Using a correctly labeled aggregate supply and aggregate demand graph, show the impact of a sudden, large decrease in private investment spending on each of the following. (a) Output (b) Price level

2. Using the results in part (a), explain how employment is affected.

3. Identify one specific fiscal policy that might be implemented to offset the effects of the decrease in investment, and explain how the policy would affect each of the following in the short run. (d) Aggregate demand (e) Output and the price level (f) Real interest rates

4. Identify an open-market operation that the central bank might implement to offset the effects of the decrease in investment, and explain how the policy would affect each of the following in the short run. (g) Real interest rates (h) Aggregate demand (i) Output and the price level

5. If the central bank continues the open-market operation identified, explain the long-run effects on each of the following. (j) Inflation (k) Value of the domestic currency in foreign exchange markets

6.Suppose the component supplier offers a discount of 2% on the purchase price if orders are placed in units of 1000. Is the discount worth accepting?

7.Define marginal utility, total utility, and diminishing utility with diagrams.

8.Identify the differences between private, common, and public goods.

9.Describe the relationship between productivity and the different costs of production. 10.Describe the various market structures, their characteristics, and the effects of each structure in relationship to the market.

11.Identify the differences between economic and accounting profit.

12.Explain discrimination in the labor market.

13.Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers.

14.Explain what is meant by the discounting approach to investment appraisal, and contrast this to more ad hoc methods such as payback. Show that there may be circumstances where information is inadequate for discounting, and where other methods more adequately reflect the firm's objectives. Finally discuss the empirical evidence (which seems to point to the use of other methods in smaller companies, but that discounting is increasingly used by large corporations).q