The Problem Of Scarcity Confronted By Industrialized Societi
the Problem Of Scarcity Is Confronted Byindustrialized Societies On
The problem of scarcity is confronted by: all societies.
Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is the whatever she would have purchased with the $10,000 and whatever she would have earned had she not been in college.
Use the following figure to answer questions 3-4: If the economy is operating at point Y and its relevant production possibility frontier is curve 1, this means that: the economy is at full employment and is efficient.
The movement from curve 1 to curve 2 indicates: a growing ability of the economy to produce capital and consumer goods.
An increase in the price of hamburger would probably result in ________ in the demand for hamburger buns: no change.
After graduation from college, you might have an increase in your income from a new job. If, as a result, you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered: an inferior good.
Use the following figure to answer question 7: A factor that may have changed supply from S1 to S2 is: better technology in the production of gasoline.
Use the following to answer question 8: If the price of chocolate-covered peanuts is $0.80, there is: a surplus of 70 bags per month.
Use the following to answer question 9: A temporary price of $2 in this market would result in: a surplus of 10,000 bushels and we would expect prices to fall.
In the market for tacos, you observe that the equilibrium price and quantity have increased. This can be caused only by: an increase in the incomes of people who eat tacos.
High-fructose corn syrup is an important ingredient in the production of many soft drinks. If as a result of a drought, the price of corn and subsequently the price of high-fructose corn syrup increases, one would expect: the supply curve for soft drinks to shift left.
An example of a government transfer is a(n): Social Security payment.
Disposable income in a particular period is: income earned plus government transfer payments less taxes.
Use the following to answer GDP in the table is: $168 billion.
The reason the dollar value of only final goods and services are counted in GDP is that: if we counted the value of all goods, we would count inputs (intermediate goods), like the value of steel in a new automobile, more than once.
Which of the following would be included in the calculation of GDP? expenditure on new construction.
If aggregate price level increase: both real GDP and nominal GDP will increase.
An economy's gross domestic product is made up of: consumption, investment, government spending, and net exports.
Real per capita GDP is: real GDP divided by the population.
In order to be officially unemployed, a person must be: looking for work in the past four weeks.
The natural rate of unemployment is achieved when: the quantity of labor supplied is equal to the quantity of labor demanded.
Consumer spending in the United States normally accounts for approximately ______ of the economy: two-thirds.
A downward shift in the consumption function can be caused by: a decrease in disposable income.
All of the following factors determine investment spending EXCEPT: expectations about future disposable income.
Use the following to answer question 25: A movement from point C on AD2 to point A on AD1 may have been the result of: decreases in the taxes paid by businesses.
Which of the following would likely cause the short-run aggregate supply curve to shift to the left? an increase in the price of imported oil.
Potential output: is the level of output that the economy would produce if all prices, including nominal wages, were fully flexible.
The long-run aggregate supply curve is vertical because in the long run: all prices are flexible.
Use the following to answer question 29: A short run increase in net exports is illustrated by: panel (c).
A negative supply shock often results in: an increase in the aggregate price level and a decrease in aggregate output.
In an inflationary gap: aggregate output is greater than potential output.
A change in taxes or a change in government transfers affects consumption through a change in: disposable income.
Use the following to answer question 33: Using the above figure, which of the following would be the appropriate response of the government upon viewing the state of the economy? Expand aggregate demand by cutting taxes to close the recessionary gap.
Fiscal policy that increases aggregate demand is: expansionary.
Contractionary fiscal policy includes: increasing taxes.
Use the following to answer question 36: The above graph shows the current short-run equilibrium in the economy. Appropriate fiscal policy action in this situation would be: a decrease in transfer payments.
If the government's total revenues are less than its total expenditures, then it has a budget: deficit.
Suppose that U.S. debt is $7 trillion at the beginning of the fiscal year. During the fiscal year, the government spending and government transfers are $2 trillion and tax revenues equal $1.5 trillion. At the end of the fiscal year, the debt is: $9 trillion.
The 2009 American Recovery and Reinvestment Act was an example of: an expansionary fiscal policy.
The national debt: grows when the government runs a deficit.
Suppose government increases its purchases of military equipment by $85 billion and the marginal propensity to consume is 0.75. A) the multiplier is: 4. B) the change in RGDP is: $340 billion. (show calculations in the paper)
Explain the difference between automatic stabilizers and discretionary fiscal policy measures. Provide examples to clarify the distinctions.
A college student waits in line for hours to purchase a ticket to the Rose Bowl, but an attorney does not. Rather than spend hours in line, he purchases a much more expensive ticket through a ticket broker. Why? (Explain in 3-4 sentences.)
Some economists argue that the official unemployment rate understates the true level of unemployment. In 3 or 4 sentences summarize these arguments.
Refer to the above figure. Assume that the economy is in short-run equilibrium at E1. If the economy is left to correct itself there will be some changes that can return the economy to the long-run equilibrium. In 3 or 4 sentences explain those changes.
Consider the information provided in the above table. A) Which year is most likely to be the base year? B) According to the above table the CPI in 2011 was 110. What does that information tell you about change in Aggregate price level? C) calculate the inflation rate between the years 2010 and 2011.
Suppose you are given the above information about a hypothetical country: A) Calculate the labor force. B) Calculate the unemployment rate. Show all your calculations.
What is stagflation? Which of the following events would lead to stagflation? In one or two sentences explain your answer: a) As a result of an increase in the value of dollar in relation to other currencies, US exports decreases. b) Greater union activity leads to higher wages. c) An increase in the quantity of money by the Federal reserve.
Paper For Above instruction
The issue of scarcity, a fundamental concept within economics, is confronted by all societies, regardless of their level of development or governing philosophy. Scarcity refers to the limited nature of resources relative to unlimited human wants, necessitating choices about how resources are allocated (Mankiw, 2020). In both industrialized and poor societies, people and governments prioritize which needs to be met, whether it involves wealth accumulation, social welfare, or infrastructure development, demonstrating that scarcity is a universal challenge.
When considering Margo's decision to spend $10,000 on a year's college tuition, the opportunity cost is the value of the next best alternative forgone. This includes both the direct expenditures she could have made with that money—such as investments or savings—and the potential income she could have earned if she had entered the workforce instead of attending college (Frank et al., 2019). Opportunity cost emphasizes that every choice involves giving up something of value, which is central to economic decision-making.
The production possibility frontier (PPF) illustrates the trade-offs an economy faces between different types of goods. If the economy operates at point Y on curve 1, it indicates full employment and productive efficiency, utilizing all available resources (Baumol & Blinder, 2019). Operating inside the curve suggests underutilization of resources, while a shift outward signifies economic growth. Movement along the curve reflects shifts in resource allocation, often prompted by technological advances or changes in resource availability.
The shift from one PPF curve to another (from curve 1 to curve 2) signals an increase in the economy's capacity to produce goods, reflecting improvements in technology, increased labor force, or capital stock (Mankiw, 2020). Such outward shifts are associated with economic growth and expansion of productive potential, enabling nations to produce more consumer and capital goods over time.
Markets respond to price changes through shifts in demand and supply. For example, an increase in hamburger prices typically leads to a decrease in demand for hamburger buns if they are complementary goods—goods used together. Conversely, if the price of one good increases, the demand for its substitute might increase, depending on consumer preferences and income levels (Krugman & Wells, 2018). Such interactions depend on the elasticity of demand and the nature of the goods involved.
Regarding consumer choice, if a rise in income leads a consumer to buy more T-bone steak and less hamburger, hamburger is categorized as an inferior good, meaning demand for it decreases as income increases. This contrasts with normal goods, for which demand rises with income (Mankiw, 2020). The classification of goods reflects consumer preferences and income elasticity of demand—key concepts in microeconomics.
Supply curves shift in response to technological advancements, input prices, and other factors. An improvement in technology for gasoline production enhances productivity, shifting the supply curve from S1 to S2 outward. Conversely, decreased labor productivity or higher input prices would shift the supply curve inward, reducing output at each price level (Frank et al., 2019).
Market imbalances such as surpluses and shortages are indicated by the relation between quantity supplied and demanded at particular prices. When the price of chocolate-covered peanuts is $0.80, and a surplus of 70 bags exists, it suggests that the market price exceeds the equilibrium, causing unsold inventory. Similarly, shortages occur when demand outpaces supply at a given price, pushing prices upward (Krugman & Wells, 2018).
Price and quantity adjustments are fundamental in market dynamics. For example, if a temporary price of $2 leads to a surplus of 10,000 bushels, the market is not at equilibrium. To restore balance, prices are expected to fall as sellers reduce prices to clear excess supply, illustrating the self-correcting nature of markets (Baumol & Blinder, 2019).
Increased demand for tacos, driven by higher consumer income, results in higher equilibrium prices and quantities. This scenario aligns with the basic supply and demand model, where shifts in demand—rather than supply—cause changes in market equilibrium (Mankiw, 2020). Factors such as rising income levels enhance demand for normal goods like tacos, raising market prices and output.
Supply increases associated with higher input prices, such as corn for soft drinks, typically shift the supply curve leftward, reducing supply at each price point. This shift raises prices and can decrease overall output, illustrating how supply shocks influence market equilibrium (Frank et al., 2019).
Governments provide transfers—such as Social Security payments, unemployment benefits, and welfare—independent of current work effort, which aim to support income and consumption. Unlike direct expenditures like highway construction, transfers are redistributions of income without corresponding goods or services (Krugman & Wells, 2018).
Disposable income, a key measure in macroeconomics, is calculated by subtracting taxes from total income plus government transfers. It directly influences consumption levels, as higher disposable income typically leads to increased consumer spending, affecting overall economic activity (Mankiw, 2020).
Gross Domestic Product (GDP) calculations based on the provided table estimate the total market value of all final goods and services produced within a country during a specific period, amounting to $168 billion in this case. GDP excludes intermediate goods to prevent double-counting and focuses on final output that contributes to economic well-being (Baumol & Blinder, 2019).
The exclusion of intermediate goods in GDP measurement prevents double counting, ensuring that only the value-added at each stage of production is tallied. Including only final goods and services provides an accurate snapshot of economic activity and avoids inflating GDP figures (Krugman & Wells, 2018).
GDP includes expenditure-based components such as consumer spending, investment, government expenditures, and net exports, which collectively illustrate total economic activity. It does not encompass financial transactions like stock purchases, as these do not produce new goods or services (Frank et al., 2019).
When aggregate prices rise, real GDP reflects the true volume of goods and services produced, adjusting for inflation. Nominal GDP may increase simply due to higher prices, but real GDP provides a clearer picture of economic growth or contraction over time (Baumol & Blinder, 2019).
GDP’s main components are consumption, investment, government spending, and net exports, representing expenditure on goods and services produced domestically. This expenditure approach complements income and production methods in measuring economic activity (Mankiw, 2020).
Real per capita GDP measures the average economic output per person, adjusted for inflation, and serves as an indicator of living standards. It is calculated by dividing real GDP by the population, helping compare economic well-being across countries and over time (Krugman & Wells, 2018).
To be officially unemployed, a person must be actively seeking work and have been doing so within the past four weeks. Discouraged workers who are not seeking employment are not counted, which may understate true unemployment levels (Frank et al., 2019).
The natural rate of unemployment occurs when the economy is at full employment, with no cyclical unemployment. It balances frictional and structural unemployment, devised as the normal or usual unemployment rate in a healthy economy (Baumol & Blinder, 2019).
Consumer spending constitutes approximately two-thirds of the U.S. economy, highlighting consumer behavior's central role in economic activity. Changes in consumer confidence and income levels directly influence overall economic performance (Mankiw, 2020).
A decline in the consumption function can result from a decrease in disposable income, leading consumers to cut back on spending. Conversely, higher disposable income or increased wealth typically boost consumption (Krugman & Wells, 2018).
Factors influencing investment include expected returns, interest rates, and production capacity, but not expectations about future disposable income, which primarily affect consumption. Investment decisions hinge on anticipated profitability and capacity constraints (Frank et al., 2019).
The movement from point C on AD2 to point A on AD1 may reflect decreased investment due to pessimistic GDP forecasts or higher interest rates, which make borrowing more costly, thus reducing aggregate demand (Baumol & Blinder, 2019).
An increase in the price of imported oil raises production costs, thereby increasing the price level and reducing short-run aggregate supply—shifting the SRAS curve leftward as firms face higher input costs (Mankiw, 2020).
Potential output signifies the maximum sustainable output an economy can produce when labor and capital are fully utilized, assuming flexible prices and wages. It reflects the economy’s capacity, not current output (Krugman & Wells, 2018).
The long-run aggregate supply curve is vertical because, over time, all prices, including wages and other input prices, adjust to equate supply and demand at the economy’s full employment level (Frank et al., 2019).
The short-run increase in net exports depicted in the figure indicates an outward shift of aggregate demand, likely driven by favorable foreign exchange rates or increased foreign demand for domestic goods (Baumol & Blinder, 2019).
A negative supply shock, such as rising oil prices, reduces supply and pushes prices upward while decreasing output. This exacerbates inflation and can lead to stagflation—a combination of inflation and stagnant growth (Mankiw, 2020).
In an inflationary gap, actual output exceeds potential output, resulting in upward pressure on prices. The economy is overheating, and without policy intervention, inflation may accelerate (Krugman & Wells, 2018).
Taxes and government transfers influence consumption by affecting disposable income levels. An increase in taxes reduces disposable income, decreasing consumption and shifting the consumption function downward (Frank et al., 2019).
When fiscal policy expands aggregate demand—such as through tax cuts or increased government spending—it aims to stimulate economic activity, especially during recessions, representing expansionary policy (Baumol & Blinder, 2019).
Contractionary fiscal policy, aimed at reducing inflation or overheating, includes increasing taxes or decreasing government spending. Increasing the money supply is a monetary policy action, not fiscal (Mankiw, 2020).
The appropriate fiscal action in the provided scenario—where the economy is in short-run equilibrium above potential—is to decrease aggregate demand by reducing government spending or increasing taxes to curb inflationary pressures (Krugman & Wells, 2018).
A budget deficit occurs when government expenditures exceed