Instructions: Read the following paragraphs, once read, establish if you agree with the premise or not, remember you must explain why or why not you agree, You must use the A P A format to justify your answer, keep your answer brief You can NOT go beyond a paragraph. Situation #1: For consumers as a group, Quiznos sandwiches are normal goods and Subway sandwiches are inferior goods. But I like the taste of Subway sandwiches than the taste of Quiznos sandwiches, so for me the Quiznos sandwiches are inferior products and Subway sandwiches are inferior products. normal. Do you agree with the person's reasoning?

Response:

Ask: How do markets eliminate surpluses and shortages? Define the concept of Surplus and shortage before establishing how it is eliminated Response:

Part II. Multiple Choice: Using reading from the modules, the textbook, or the internet, select the best alternative that you consider to be the correct one. value to two points each premise.

1) In the short run, macroeconomic analysis focuses on ________, while, in the long run, the focus is on ________. a) fiscal policy; monetary policy B) short-term economic growth; population demographics C) unemployment; inflation D) the economic cycle; long-term economic growth

2) ________ refers to alternating periods of economic expansion and recession economy in an economy. A) Tax policy B) Labor productivity C) The business cycle D) Positive economic analysis

3) The process by which productivity raises the average standard of living is called a) Long-term economic growth. B) labor productivity. C) analysis of population growth. D) the hypothesis of economic prosperity.

4) Suppose the economy is in equilibrium with an output gap equal to zero and the actual inflation rate is equal to the expected inflation rate. If the economy experiences a positive demand shock, the output gap ________ and the rate of inflation___________ A) increase; increase B) increase; diminish C) decrease; increase D) decrease; diminish

5) Suppose the economy is in equilibrium with an output gap equal to zero and the actual inflation rate is equal to the expected inflation rate. If the economy experiences a negative demand shock, the output gap ________ and the rate of inflation ________. A) increase; increase B) increase; diminish C) decrease; increase D) decrease; diminish

6) It is generally considered that the best measure of the standard of living is A) labor productivity. B) the average length of a typical business cycle. C) the labor force participation rate. D) Real GDP per capita.

7) China has recently been experiencing rapid economic growth, and current Chinese real GDP per capita is A) approximately equal to real GDP per capita in the United States. B) still significantly less than real GDP per capita in the United States. C) on par with real GDP per capita in most high-income countries. D) still at a level equivalent to real GDP per capita in the world's poorest countries world.

8) Underlying fluctuations in real GDP due to the business cycle are reflected in the fluctuations of A) inflation. B) population growth. C) the labor force. D) Real GDP per capita.