If nominal wage rates increase by 2 percent per year and the price level increases by 5 percent per year, real wages will:
a. increase by 3 percent per year.
b. increase by 5 percent per year.
c. increase by 2 percent per year.
d. decrease by 5 percent per year.
e. decrease by 3 percent per year.
e
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Suppose that real GDP starts at 100 and grows at a rate of 10 percent per year for two years. In the third year real GDP would be
A) 110. B) 110.1. C) 120. D) 121.
Which of the following is true about the Federal Reserve and its ability to prevent recessions? The Federal Reserve
A) can fine tune the economy and realistically hope to keep the economy from experiencing recessions. B) cannot realistically fine tune the economy and has little to no effect on the magnitude and length of recessions. C) does not try to eliminate recessions, but instead focuses on preventing inflation. D) cannot realistically fine tune the economy, but seeks to keep recessions shorter and milder than they would otherwise be.
The demand and supply functions for sweatshirts (the basic grey kind) are as follows:
Demand Supply Quantity Quantity Demanded Supplied Price (per period) Price (per period) $10 15,000 $10 22,000 9 15,500 9 19,000 8 16,000 8 16,000 7 16,500 7 13,000 6 17,000 6 10,000 5 17,500 5 7,000 4 18,000 4 4,000 3 18,500 3 1,000 2 19,000 2 0 a. Graph the demand and supply functions for sweatshirts and find the equilibrium price and quantity. b. What effect will an increase in the price of gym shoes (a complement) have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph. c. What effect will a wage increase for workers in the sweatshirt industry have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.
In what way does this map serve as an abstraction?
Zoom out to the highest level. How does this affect the level of abstraction? When would each type of map be most useful? Generalize this argument by discussing the level of abstraction needed for alternative economic models.