I.

1. In the labor market, what causes a movement along the demand curve? What causes a shift in the demand curve?

2. In the labor market, what causes a movement along the supply curve? What causes a shift in the supply curve?

3. Why is a living wage considered a price floor? Does imposing a living wage have the same outcome as a minimum wage?

4. In the financial market, what causes a movement along the demand curve? What causes a shift in the demand curve?

5. In the financial market, what causes a movement along the supply curve? What causes a shift in the supply curve?

6. Why is the demand curve with constant unitary elasticity concave?

7. Why is the supply curve with constant unitary elasticity a straight line?

8. The federal government decides to require that automobile manufacturers install new anti-pollution equipment that costs $2,000 per car. Under what conditions can carmakers pass almost all of this cost along to car buyers? Under what conditions can carmakers pass very little of this cost along to car buyers?

9. Country A has export sales of $20 billion, government purchases of $1,000 billion, business investment is $50 billion, imports are $40 billion, and consumer spending is $2,000 billion.What is the dollar value of GDP?

10. Which of the following are included in GDP, and which are not?

a. The cost of hospital stays

b. The rise in life expectancy over time

c. Child care provided by a licensed day care center

d. Child care provided by a grandmother

e. A used car sale

f. A new car sale

g. The greater variety of cheese available in supermarkets

h. The iron that goes into the steel that goes into a refrigerator bought by a consumer.

II.

1. Explain what the Industrial Revolution was and where it began.

2. Explain the difference between property rights and contractual rights. Why do they matter to economic growth?

3. Are there other ways in which we can measure productivity besides the amount produced per hour of work?

4. Assume there are two countries: South Korea and the United States. South Korea grows at 4% and the United States grows at 1%. For the sake of simplicity, assume they both start from the same fictional income level, $10,000. What will the incomes of the United States and South Korea be in 20 years? By how many multiples will each country's income grow in 20 years?

5. What do the growth accounting studies conclude are the determinants of growth? Which is more important, the determinants or how they are combined?

6. Is the increase in labor force participation rates among women better thought of as causing an increase in cyclical unemployment or an increase in the natural rate of unemployment? Why?

7. Many college students graduate from college before they have found a job. When graduates begin to look for a job, they are counted as what category of unemployed?

8. What is the difference between being unemployed and being out of the labor force?

9. How do you calculate the unemployment rate? How do you calculate the labor force participation rate?

10. Are all adults who do not hold jobs counted as unemployed?