Homework Set Chapter 11

1. Who are the sellers in the factor markets? Who are the sellers in the product markets?
2. If U.S. imports total $1,360 billion and U.S. exports total $950 billion, what would U.S. net exports equal?
3. Determine whether each of the following is true or false: a. In the circular flow of income model, total expenditures must always equal total income b. There is an inverse relationship between the price level and the quantity of aggregate supply c. If the U.S. price level decreases, net exports will decline
4. Indicate what each of the variables in the following equation represents.
Y = C + G + I = X

5. If the price level and the level of real GDP both increase, would it be more likely that the aggregate the supply curve or the aggregate demand curve shifted? Would this shift represent an increase or a decrease?

6. In terms of aggregate demand and aggregate supply, what does the graph below depict?

7. If the price of Pepsi increases, U.S. consumers can easily substitute to an other brand of cola in the same stores. If the price level of all U.S. goods increases, to what type of goods would U.S consumers have to substitute in order to avoid the higher prices? What would this do to the quantity demanded of all U.S. goods?

8. What would happen to the aggregate supply curve if worker productivity increased as a result of increased training and education?

9. Assumer that you go on vacation to France. If the exchange rate value of the dollar increased in relation to the French currency, the euro, would the good you purchase in France become more or less expensive to you? Would you be likely to buy more goods or fewer goods while in France?

10. Which of the following could lead to inflation? More than one answer may be correct.
a. an increase supply b. an increase demand c. a decrease supply d. a decrease