Macroeconomics Mock Exam One

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Oct 28, 2013 (3 years and 7 months ago)

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Lecture Summary

Introduction to Concept in Economics

1. Economics and Social Sciences



Experiments in Social Sciences



The Ceteris Paribus Assumption

2. Foundation of Economics



Scarcity and Unlimited Wants



Economic Decisions

o

Marginal Analysis

o

Allocat
ive Efficiency

3. The Fundamental Questions for Every Economy: Market vs. Command vs. Mixed Economies



What Goods and Services Are Produced?



How Are Goods and Services Produced?



For Whom Are Goods and Services Produced?

4. Obstacles and Pitfalls in Eco
nomics



Fallacy of Composition



Unscrambling Cause and Effect



Post Hoc Fallacy

5. Macroeconomics and Microeconomics

6. Positive Analysis and Normative Analysis

7. Math Review



Linear Equations

o

Contextual Meaning of the Slope and the Y
-
Intercept

o

Direct
Relationships

o

Inverse Relationships



Graphing a Relationship Among Several Variables



Absolute Change vs. Percent Change


MACROECONOMICS WORKSHEET 1

PRODUCTION POSSIBILITY FRONTIER


Answer the following questions in the space provided,
showing all relev
ant
calculations, and explaining all your graphs
. Be succinct and yet thorough.

PART I

1.

Assume that the following is PPC for country “IN”


a

b

c

d

e

f

g

h

Gadgets

70

60

50

40

30

20

10

0

Widgets

0

20

40

60

80

100

120

140


Assume further that the followin
g is PPC for country “LDC”


a

b

c

d

e

f

g

h

Gadgets

35

30

25

20

15

10

5

0

Widgets

0

15

30

45

60

75

90

105

Should the two countries engage in trade? Explain.


2.

Which country should export Gadgets? Why?


3.

Which country should export Widgets? Why?



4.

What
are the limits of terms of trade? Explain.



PART II

5.

Assume now that the following is PPC for country “IN”


a

b

c

d

e

f

g

h

Gadgets

70

60

50

40

30

20

10

0

Widgets

0

20

40

60

80

100

120

140


Assume further that the following is PPC for country “LDC”


a

b

c

d

e

f

g

h

Gadgets

35

30

25

20

15

10

5

0

Widgets

0

10

20

30

40

50

60

70


Should the two countries engage in trade? Explain.



6.

If they should trade, which country should export Gadgets? Why?



7.

If they should trade, which country should export Widget
s? Why?



8.

If they engage in trade, what are the limits of terms of trade? Explain.


MACROECONOMICS WORKSHEET 2

PRODUCTION POSSIBILITY FRONTIER


Answer the following questions in the space provided,
showing all relevant
calculations, and explaining all y
our graphs
. Keep your answers limited to
the space provided.


1.

Assume that Country Neo has the following PPC. Draw the PPC (remember
to label all axis

it does not have to be drawn to scale).


a

b

c

d

e

f

g

h

shoes

70

60

50

40

30

20

10

0

computers

0

20

4
0

60

80

100

120

140


2.

If you have drawn the PPC above correctly, you will notice that the shape of
the above diagram
does not

portray the true PPC. What is the shape of the
true PPC? Why must PPCs shaped in such a way?


3.

What is the opportunity cost of pr
oducing one more shoes for Neo?


Assume that the following gives a PPC for Zor:


i

j

k

l

m

n

o

p

shoes

70

60

50

40

30

20

10

0

computer
s

0

10

20

30

40

50

60

70

4.

What is the opportunity cost of producing one more shoes for Zor?


5.

Who has the comparative adv
antage in the production of shoes? Explain.


6.

If the two countries were to trade with one another, who should produce
the shoes?


7.

What are the limits of terms of trade?


MACROECONOMICS WORKSHEET 3

PRODUCTION POSSIBILITY FRONTIER


Assume
that the followin
g is your production possibility frontier.

















1.

Does your PPF portray a world of tradeoff? How? If so, why must there be
such tradeoffs between studying and partying?

2.

Does your PPF portray a world of increasing opportunity cost? How?

If so,
explain why opportunity costs are rising as one parties more? Why does it
rise as one studies more?

3.

Explain how both choices B and C are efficient.

4.

Which choice (B or C) would most likely lead you to attain choice D in your
old age?

5.

If you were t
o choose A, explain what you are doing.

A


B




D


C

PARTY

STUDY