Answer the next question using the information below:Answer the next three questions using the information below:Economics 102Summer 2011Handout #41. Which one of the following is counted in GDP for the United States?a. Cars produced at Toyota’s plant in Indiana. Toyota is a Japanese company.b. Cars produced by the American company Ford at their plant in Ontario, Canada.2. Discouraged workers are people who are currently not working whoa. want a job, but have given up looking for one.b. used to have a job, but no longer want a job. 3. The price paid for taking out a loan is the interest rate. Holding everything else constant, if the interest rate increases, a. the demand for loans decreases.b. the total amount of money loaned out will decrease. c. there is no change in the market for loans.d. the outcome is uncertain—the law of demand does not hold for loans.Use the following graph to answer the next two questions.4. Which of the following equations is a correct representation of the demand curve described in the graph above?a. Q = 300 - 15Pb. Q = 20 - (1/15)Pc. P = 20 - 300Qd. Q = 300 – 20P5. What is the consumer surplus if the equilibrium price is $8?e. $12a. $1500b. $1080c. $21601QP300206. The following information is available for the country of Wonderland:Year Inflation rate relative to previous year2000 10%2001 10%2002 5%What is the total inflation rate (i.e. the total percentage rise in the price level) over the entire period?a. 25%b. 27.05%c. 20.34%d. 30.25%7. Which of the following is not counted in the civilian labor force?a. a factory worker who is currently laid offb. a full-time student who is not working and is not currently looking for a jobc. a small business owner who has not yet earned a positive profitd. an unemployed individual who is not working but looking for a job8. Assume in a SMALL OPEN economy the domestic market demand curve is QD = 1200 - 4P and the domestic market supply curve is QS = 2P and the world price is $100. What will be the Deadweight Loss in this economy if a tariff of $50 is imposed? a. $ 15000b. $ 7500c. $ 10000d. $ 50009. The real wage per hour and the inflation rate in 2001 and 2002 are given in the table below (base year2000)Year Real wage/hour Inflation rate2001 $18.80 10%2002 $20.00 10%The nominal wage and the CPI in 2002 were:a. $ 24.20 and 121b. $ 22.50 and 110c. $ 21.50 and 107.5d. $ 25.60 and 1212Answer the next two questions using the information belowThe country of Wowza produces only three goods: 1) shirts, 2) pants, and 3) cotton. All the cotton is usedto produce the other two goods. The following table describes Wowza’s production during the years 1999 and 2000. Use the table to answer the next two questions.1999 2000Good Quantity Price/Unit Quantity Price/UnitShirts 11 $4 10 $4Pants 4 $9 10 $8Cotton 5 $4 10 $410. What is the Nominal GDP of Wowza in 1999?a. $ 20b. $ 80c. $ 100d. $ 16011. The base year is 1999. What is Wowza’s growth rate of Nominal GDP from 1999 to 2000?a. 50%b. 60%c. 150%d. 160%12. The existence of an “underground economy” causes measured GDP to overestimate actual output. a. True.b. False.13. One of the reasons the aggregate production function shows diminishing returns to labor is that as thenumber of workers increases:a. The quantity of land and capital in the economy decreases.b. The quantity of land and capital per worker decreases.14. Fiscal Policies in the Classical modela. Could be quite useful when the economy is in a recession.b. Are unnecessary, because the economy will achieve the full employment level of output andemployment automatically.3Answer the next question using the information below:The demand and the supply of labor in the country of Simpleland are:104 wLSwLD280 The aggregate production function is:Labor ofQuantity 200250060 billions)(in GDP Real15. The real GDP corresponding to the full employment level of output is:a. $10 billion.b. $40 billion.c. $50 billion.d. $100 billion. Answer the next two questions using the information below:Consider an economy described by the following parameters:G=1000X-M=50I=1400T=500C=2000+0.9(Y-T)Where G is government expenditure, (X-M) is net exports, I is the level of planned investment, T are lump-sum taxes on income, C is household consumption and (Y-T) is disposable income.16. The level of autonomous consumption and the MPC in this economy are, respectively:a. 2000 and 0.9.b. 1550 and 0.9.c. 1450 and 9.d. 1550 and 0.1.17. The equilibrium level of income is:a. $35,500.b. $40,000.c. $30,500.d. $40,500.4Answer the next three questions using the information below:Consider the following information about the country of SimplelandG = $600T = $800I = $1000 - 5000 iRS = $320 + 1000 iR(Hint: in this problem, the real interest rate is written as a decimal: e.g., if the real interest rate is 10%, it is written as iR=0.10).18. What is the equilibrium real interest rate?a. 4%b. 6%c. 8%d. 10%19. In equilibrium, what is the amount of injections in this economy? Assume this is a closed economy.a. $2,000b. $1,500c. $1,200d. $1,00020. Suppose that the government decides to increase G by $120. Assuming that aggregate income doesnot change, which of the following is the most plausible effect of this policy?a. The rise in G partially crowds out private sector spending. Indeed, because of the increase in theequilibrium interest rate, private investment increases by $100.b. The rise in G completely crowds out private sector spending. Indeed, because of the increase inthe equilibrium interest rate, investment decreases by $120.c. The rise in G partially crowds out private sector spending. Indeed, because of the increase in theequilibrium interest rate, private consumption increases by $20 and private investment decreasesby $ 100.d. The rise in G completely crowds out private sector spending. Indeed, because of the increase inthe equilibrium interest rate, private consumption decreases by $20 and private investmentdecreases by $ 100.521. Boston and Chicago both produce athletic socks in two colors, red and white. The PPFs for both Boston and Chicago are linear. Currently both cities produce at a point on their PPFs such that they each produce both colors of socks. If Boston spends all of its resources producing one color of socks, it can either produce 2,000 red socks or 1,000 white socks. If Chicago spends all of its resources producing onecolor of socks, it can either produce 3,000 red socks or
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