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 more than the taste of Quiznos sandwiches, so for me Quiznos sandwiches are inferior products and Subway sandwiches are normal products.Do you agree with the person's reasoning?

Question:

How do markets eliminate surpluses and shortages? Define the concept of Surpluses and Shortages before establishing how to eliminate it.

Part II. Multiple selection: Using the reading of the modules, the textbook or the internet, select the best alternative that you consider to be the right one. Value each premise at two points.

1) In the short term, macroeconomic analysis focuses on ________, while, in the long term, the focus is on ________.

(a) fiscal policy; monetary policy

(B) short-term economic growth; demographics of the population

(C) unemployment; inflation

(D) the business cycle; long-term economic growth

2) ________________________ refers to alternate periods of economic expansion and economic recession in an economy.(A) Fiscal policyB) Labor productivityC) The business cyclesD) 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 real inflation rate is equal to the expected inflation rate. If the economy experiences a positive demand shock, the output gap ______________ and the inflation rate_________________

(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 real inflation rate is equal to the expected inflation rate. If the economy experiences a negative demand shock, the output gap ________, and the inflation rate ________.

(a) increase; increase

(B) increase; diminish

(C) decrease; increase

(D) decrease; diminish

6) The best measure of living standards is generally considered to be

A) productivity of labor.

(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 the current Chinese real GDP per capita is

A) approximately equal to real GDP per capita in the United States.

B) still significantly lower 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.

8) Underlying fluctuations in real GDP due to the business cycle are reflected in fluctuations in

(A) inflation.

(B) population growth.

(C) the labour force

(D) Real GDP per capita.

9) Using the following graph below, Suppose the economy is in equilibrium at 1 = 0. All other things being equal, a decline in the rate of productivity growth will result in a move from ________ to _________ point.

(A) A; B

(B) B; To

(C) A; C

(D) A; D