Ec 301 midterm
1. (7 points) How are presidential election outcomes related to the performance of the economy?
The re-election of the incumbent has been synonymous with low inflation and low un-employment. There has been only a few occasions where the results did not follow this norm
2. (7 points) Discuss the difference between Microeconomics and Macroeconomics.
Microeconomics deals with the individual parts in the economy and how they relate to each other. Macroeconomics deals with the totals of these parts in our economy
3. (10 points) Use the concepts of gross and net investment to distinguish between an economy that has a rising stock of capital and one that has a falling stock of capital. “In 1933 net private domestic investment was minus $6 billion. This means that in that particular year the economy produced no capital goods at all.” Do you agree? Why or why not? Explain: “Though net investment can be positive, negative, or zero, it is quite impossible for gross investment to be less than zero.”
No I do not agree, If there was minus $6 billion does not mean there was no new goods produced that year. It just means the in that there was $6 billion less spent on private domestic investment from the previous year.
Yes it is impossible for gross investment to be negative in any year
4. (7 points) What are the major factors that have affected U.S. household consumption since the recession in 2001?
5. (7 points) Briefly explain how the following would shift the IS function to the right.
a. A change to lump-sum taxation (Specify whether increase or decrease is needed to shift IS curve to the right.)
b. A change to government spending (Specify whether increase or decrease is needed to shift IS curve to the right.)
6. (7 points) Explain briefly how a change to the following MS, MD, or P (ceteris paribus) would shift the LM function to the right. Include in your discussion whether the variable would have to increase or decrease to cause the
The re-election of the incumbent has been synonymous with low inflation and low un-employment. There has been only a few occasions where the results did not follow this norm
2. (7 points) Discuss the difference between Microeconomics and Macroeconomics.
Microeconomics deals with the individual parts in the economy and how they relate to each other. Macroeconomics deals with the totals of these parts in our economy
3. (10 points) Use the concepts of gross and net investment to distinguish between an economy that has a rising stock of capital and one that has a falling stock of capital. “In 1933 net private domestic investment was minus $6 billion. This means that in that particular year the economy produced no capital goods at all.” Do you agree? Why or why not? Explain: “Though net investment can be positive, negative, or zero, it is quite impossible for gross investment to be less than zero.”
No I do not agree, If there was minus $6 billion does not mean there was no new goods produced that year. It just means the in that there was $6 billion less spent on private domestic investment from the previous year.
Yes it is impossible for gross investment to be negative in any year
4. (7 points) What are the major factors that have affected U.S. household consumption since the recession in 2001?
5. (7 points) Briefly explain how the following would shift the IS function to the right.
a. A change to lump-sum taxation (Specify whether increase or decrease is needed to shift IS curve to the right.)
b. A change to government spending (Specify whether increase or decrease is needed to shift IS curve to the right.)
6. (7 points) Explain briefly how a change to the following MS, MD, or P (ceteris paribus) would shift the LM function to the right. Include in your discussion whether the variable would have to increase or decrease to cause the