Exam 2: Economic Models: Trade-Offs and Trade 25

Use the following to answer questions: Figure: Seasonally Adjusted Unemployment Rate -(Figure: Seasonally Adjusted Unemployment Rate) Look at the figure Seasonally Adjusted Unemployment Rate. The distance between each labeled point on the horizontal axis is one year. Using this graph, the unemployment rate was at a minimum in ______ and a maximum in ______.

Use the following to answer questions: Figure: Strawberries and Submarines II -(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. The downward slope of the production possibility frontier implies that resources:

Because models make simplifying assumptions, they are of very little use in the real world.

Use the following to answer questions: Scenario: Linear Production Possibility Frontier Largetown has a linear production possibility frontier, and it produces socks and shirts with 80 hours of labor. The table shows the number of hours of labor necessary to produce one pair of socks or one shirt. -(Scenario: Linear Production Possibility Frontier) Look at the scenario Linear Production Possibility Frontier. If Largetown decides to devote half of its labor time to the production of socks and half of the time to the production of shirts, it can produce _____ shirts and _____ pairs of socks.

Which of the following is sold in the product market?

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

Use the following to answer questions: -(Table: Fish and Coconut Production Possibilities) The table Fish and Coconut Production Possibilities shows the maximum amount of fish or coconuts that Tom and Hank can produce when each produces only one of the goods. The table implies that Hank has an absolute advantage in the production of both goods.

"All other relevant factors remain unchanged" is another way of saying:

The financial meltdown in 2008-2009 was partially the result of a faulty economic model that underestimated the risk of mortgage-backed securities.

Use the following to answer questions: Figure: Production Possibility Frontier Curve for Tealand -(Figure: Production Possibility Frontier for Tealand) Look at the figure Production Possibility Frontier for Tealand. Tealand is producing at point C on its production possibility frontier. What is the opportunity cost of increasing the production of tea from 20 million cups to 30 million cups?

Which of the following is an example of a positive statement?

Use the following to answer questions: -(Table: Production Possibilities Schedule I) Look at the table Production Possibilities Schedule I. If the economy produces 10 units of capital goods per period, it also can produce at most _____ units of consumer goods per period.

A mortgage-backed security is an asset that:

If countries engage in international trade:

Which of the following two statements is a positive statement? Which is a normative statement? I. The federal minimum wage in 2014 was $7.25 an hour. II) The minimum wage should be high enough that families will not live in poverty.

Jim is being paid $7.25 an hour to work at a restaurant. In the circular flow this is an example of a:

Use the following to answer questions: Figure: Sugar and Freight Trains -(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:

The basis of the circular-flow diagram is that the money flowing into each sector or market is equal to the money that flows out.

The production possibility frontier illustrates that:

Use the following to answer question: Figure: Y = f(X) -(Figure: Y = f(X) Look at the figure Y = f(X). The slope of the relation between x and y: