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Macroeconomics HW 2 Comparative Advantage, Trade 1. What indicator can be used to measure to what extent a country is dependent on foreign trade? Petroleum MEX Petroleum US 40 30 20 Com 40 Corn 2. The figure above shows domestic PPFs of two countries. a. Find the opportunity cost of producing I unit of com in the United States 1 ( 40 : 40 ) = 1 b. Find the opportunity cost of I unit of com in Mexico _15 (20 : 20) = 1.5 C. The US has comparative advantage in _Dork d. Mexico has comparative advantage in _Fans pum If trade opens up between the US and Mexico, \\S firms should specialize in producing and Mexico should specialize in producing Petroleum 3. What are the main motives behind protectionism in the US or in other countries? 4. What tools can countries use to restrict trade?Macroeconomics HWJ GDP 1. Which of the following is an intermediate good? a) the purchase of gasoline by a family for a ski trip to Colorado bj the purchase of jogging shoes by a professor a Broadway show d) the purchase of baseball bats by a professional baseball team. 2. A Texas oil company extracts petroleum and sells it to a refinery for $1,000. After processing. the refinery sells the gasoline to a wholesaler for $1,500, who then sells it to a gas station for $1,700. The gas station sells it to customers for $2,500. In these transactions, how much has been added to GDP? 3. Consider the following data for Miniland, a country that produces only three final products, books, eye exams and shirts. All colton is used in production of shans. 2010 2017 Product Quantity Price $ Quantity Price S Hooks 50 60 Eye examti 30 12 40 Shirts 20 55 Collon 0.20 200 0.40 a. Calculate Nominal GDP for both years, and GDP of 2017 in prices of 2010. b. By how many percent did the economy (real GDP) grow between 2010 and 20177 c. By how many percent did the price level increase? Compute GDP deflator (ratio of nominal to real GDP 2017) 4. GDP in an economy is $4,600 billion. Consumer expenditures are $3,500 billion, government purchases are 5900 billion, and gross private domestic investment is $400 billion. Use GDP = C + 1 + G + NX to find net exports (Exports minus Imports). Show work, 5. Which of the following would be included in the gross national product (GNP) of the United States? A. Production from a U.S. firm that operates in Mexico. B. Production from an Hungarian citizen who works in Denver, CO. C. Production from a Canadian firm that operates in Montana. D. All of the above are included in the GNP of the U.S.6. In 2007. the rate of growth of Real Gross Domestic Product was 3,7%%. In 2008, it was 0.2%%. That means a. Production was less in 2008 than in 2007. b. Production was declining at a decreasing rate c. Production was declining in 2008 and rising in 2007 d. Production was growing at a decreasing rate c) There was virtually nothing produced in 2008 7. Use table on the next page to answer the following questions. a). What is the most recent estimate of the US GDP in current dollars? bj. When was the US economy in recession? c). When were the years of economic expansions? d) Total real production of goods and services in the US increased 10 times since what year? 8. In 1930 the US population was 123 million; in 2016 it was 323 million. Using total real GDP data from the table, compute real GDP per capita then and now. How many times richer is an average person now compared to an average person in 19307 Show work. 9. Which statement is correct? a. During a recession spending on capital goods increases, b. Generally, real output and employment show little variance over the business cycle. e Recessions have not been severe because economists and statisticians have been able to predict their occurrence and intensity with high accuracy. d. The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle. 10. Per capita GDP of Ukraine is 78,435 hryvnas. How much is it in USD if one dollar is 27 hryvnas. Show work. 1 1. Circle which of the following items are not reflected in GDP, Explain why GDP is not an becurate measure of wellbeing. 1. household production li. services ini. distribution of income iv. military spending W. intermediate goods vi. underground economy vil, crime and air quality vill, divorce Files ix. air and water pollutionMacroeconomics HW3 Supply and demand 1. The graph below illustrates supply and demand in the market for souvenir T-shirts in NYC. a. What is the current market price and amount sold? b. Describe the state of the market (surplus, shortage, or equilibrium) when the price is set at $10, C. Describe the state of the market when the price is set at $4. d. Suppose the number of tourists increase, what will happen in this market? Explain and draw a new curve. Price D S $ 10 4 0 5 10 15 20 25 Quantity, thousands 2. Consider the following information regarding the demand and supply of cars (in thousand units) in New York City this year at various prices. Sketch the graph. label it, mark equilibrium price and quantity Price Quantity Quantity Demanded Supplied $50,000 |10 90 $40,000 20 75 $30 000 40 60 $20,000 50 50 $10.000 60 40 $5.000 80 3. Make two lists: factors that can increase D. and factors that can increase S in the market for cars in NYC. 4. Using S and D diagrams, predict how each of the following events will affect equilibrium market P and Q in the corresponding market. Sketch a supply and demand diagram, show which curve shifts, Explain briefly. a. Orange juice market, A hurricane in Florida destroys hall of the orange crop. b. Market for smart phones. Technological progress lowers costs of production. c. Market for single-family houses. Population is becoming wealthier, and interest rates are lower. d. Market for marijuana in MY state, Marijuana is legalized