Econ 1110
1. In an economy at full employment, Y=C+I+G+NX. List, define, and explain, the component parts of the formula? Would you consider our Economy at Full Employment now? Why or why not?
a. List, define and explain:
i. Y Output
1. Define Produce, deliver, or supply (data) using a computer or other device.
2. The output is outcome of add C, I, G, and NX. ii. C Consumption
1. Define using up of a resource.
2. Consumption is normally the largest GDP component. iii. I Investment
1. Define The action or process of investing money for profit or material results.
2. Some people invest in businesses to turn a profit over and make a successful way to work with money iv. G Government Purchases
1. Define Purchases of newly produced goods and services by local, state, and federal government.
2. Nebraska state department paid for a new road to be paved
v. NX Net exports
1. Define Exports minus imports.
2. Jobs going overseas and is not importing the goods back
b. I think that our economy is not at full employment because there is a lot of people who are not employed at the time. There will always be a demand for most all jobs so there will never be a full employment.
2. For a normal product at a store, we are the demander and the store is the supplier. When it comes to labor, however, we are the supplier and the various businesses are the demanders of our labor. How are our supply and a firm’s demand affected by a real wage increase and decrease?
a. The real wage is determined in the labor market by demand and supply of labor. The supply depends on the willingness to go to work at different wage rate. The demand depends on the value of marginal product of labor. If marginal product of labor is constant, a decrease in real wage will increase demand.
3. Explore the Robert Solow’s capital deepening model (appendix A, page 186, to chapter 8). Explain what each of the lines represents and why capital deepening must eventually come to an end.
a. List, define and explain:
i. Y Output
1. Define Produce, deliver, or supply (data) using a computer or other device.
2. The output is outcome of add C, I, G, and NX. ii. C Consumption
1. Define using up of a resource.
2. Consumption is normally the largest GDP component. iii. I Investment
1. Define The action or process of investing money for profit or material results.
2. Some people invest in businesses to turn a profit over and make a successful way to work with money iv. G Government Purchases
1. Define Purchases of newly produced goods and services by local, state, and federal government.
2. Nebraska state department paid for a new road to be paved
v. NX Net exports
1. Define Exports minus imports.
2. Jobs going overseas and is not importing the goods back
b. I think that our economy is not at full employment because there is a lot of people who are not employed at the time. There will always be a demand for most all jobs so there will never be a full employment.
2. For a normal product at a store, we are the demander and the store is the supplier. When it comes to labor, however, we are the supplier and the various businesses are the demanders of our labor. How are our supply and a firm’s demand affected by a real wage increase and decrease?
a. The real wage is determined in the labor market by demand and supply of labor. The supply depends on the willingness to go to work at different wage rate. The demand depends on the value of marginal product of labor. If marginal product of labor is constant, a decrease in real wage will increase demand.
3. Explore the Robert Solow’s capital deepening model (appendix A, page 186, to chapter 8). Explain what each of the lines represents and why capital deepening must eventually come to an end.