Production Possibility Curve

I. DEFINITIONS. Define any 10 terms. Give examples where pertinent.

Macro Economics Opportunity cost
Model / Theory Micro Economics
Real capital Fiscal
Deficit GDP
Debt Net exports
Consumer Price Index Producer Price Index Consumption spending Investment
Inflation Production Possibility Curve

II. ESSAY QUESTIONS. Please answer Question three (3), and either question one or two. Answer all parts of each question.

1. a) What is Supply ? What is Demand ?
   b) Develop a model of a market, utilizing supply and demand.
   What are the dominant variables or parameters ?
   c) What is a shortage ? What is a surplus ? DEMONSTRATE
   d) Via the model, explain the dynamic changes that can happen in a market.
   Give examples.
   e) Relate the Micro economic model of supply and demand to the Macro
   economic model of Aggregate Demand and Aggregate Supply.
2. a) What is the Business cycle ? Demonstrate and explain.
   b) What is the importance of GDP ?
   c) What is the distinction between nominal GDP and real GDP?
   What is the GDP price deflator ?
   d) From a macro economic perspective, how do we measure economic
   growth ? Explain, and give examples.
   e) How important do you think is the measurement of macro-economic
   growth ?
3. Please see the attached article from the Wall Street Journal. Review carefully the article. a) What was the percentage change in GDP for the year 2020 compared to 2019 ? b) What was the percentage change in 4th quarter GDP (2020) compared to the previous quarter ? c) What was the percentage change in 4th quarter GDP compared to same quarter, one year earlier ? d) Which sectors (industries) of the economy were most negatively affected ? e) Based on these statistics, what do you think will be the outcome for 2021 ? What factors may be affect the outcome ?</code></pre></li>

Sample Solution