ECON 2500 Name_____________
Exam #1 October 26, 2000
1. What does NAFA stand for? ________________________
2. The governor of California is _________________________.
3. Water boils at a temperature of ________________________.
Answer four (4) of the following six (6) questions:
1. What is the production possibilities curve? What concepts can it be used to illustrate? What basic economic goals can it be used to illustrate?
2. What is the law of demand? What is a demand curve? What are the basic determinants of demand? What does it mean when these determinants change?
3. What does equilibrium in a market system mean? What does the term "invisible hand" mean? Explain and illustrate as appropriate. What are the key motivating factors in the system? Are there any social issues which must be addressed?
4. Explain/define as appropriate the following terms:
a) Final good,
b) CPI,
c) Real vs. nominal,
d) Tariff,
e) Cyclical unemployment.
5. Given the production possibilities tables for two countries what can be said about relative costs in each country. If trade occurs what might the terms of trade be and why?
|
Lilli Production Possibilities Table |
|
Robding Production Possibilities Table |
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|
Production Alternatives |
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Production Alternatives |
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|
Product (lbs) |
A |
B |
C |
D |
E |
F |
Product (lbs) |
A |
B |
C |
D |
E |
F |
|
|
Apples |
40 |
32 |
24 |
16 |
8 |
0 |
Apples |
75 |
60 |
45 |
30 |
15 |
0 |
|
|
Bananas |
0 |
4 |
8 |
12 |
16 |
20 |
Bananas |
0 |
5 |
10 |
15 |
20 |
25 |
|
6. Where Y=C+Ig determine the equilibrium level of income (Y). Also determine at equilibrium the total amount of consumption, saving and investment. For this economy C= 50 + .75Y and the equation for investment is Ig = 100. How can this information be presented graphically?