1. What was instrumental in resolving the key economic problem of the 1970s?

a) strong fiscal contraction

b) contractionary policies made possible by robust economic growth

c) a positive classical productivity shock

d) strong monetary contraction

e) low unemployment

2. The supply Qs = s(P, Pm) has the functional form of:

Qs = -12 + 0.5P - 2Pm

initially, the materials cost Pm_0 = 7.

Find the optimal quantity to supply if the price is P=76 and P=80.

At P=76, Q_0 = .

At P=80, Q_0 = .

3. Now, the cost of materials changes to Pm_1 = 9.

Find the optimal quantity to supply if the price is P=76 and P=80.

At P=76, Q_1 =

At P=80, Q_1 =

Draw the second supply curve and show how supply shifted.

4. Over the year, the country's workers earned 50 in wages. Further, 5 came in net labor and capital payments from abroad. The population consumed 70. The government spent 35. The depreciation was 20, which was more than offset by the investment of 25. The indirect taxes added up to 15. Imports exceeded exports by 10.

In your written work, set up the expenditure and the national income equations.

Plug in the values from the prompt.

Use them to find the capital income (same as the rent).