Albany State University Chapter 2 Macroeconomic Problems Answer each of the questions and show your work. You can either write the answers and then upload

Albany State University Chapter 2 Macroeconomic Problems Answer each of the questions and show your work. You can either write the answers and then upload to this link or type your answers in the Word document and then attach it back here. The text book required is free online, here’s the link https://openstax.org/books/principles-macroeconomi… Chapter 02 Problem Set
Directions: Use the five problems below to help guide you in answering a series of questions on
the Blackboard course page. I would go through these problems in detail first before trying to
answer questions.
1. Consider Zia who has a spending allowance of $100. She is contemplating buying DVDs and
blouses. Assume DVDs cost $10 and blouses cost $20.
a. Draw a budget constraint that is similar to Figure 2.2. Put DVDs on the vertical axis
and blouses on the horizontal axis.
b. If Zia buys three blouses, how many DVDs can she afford to buy?
c. If Zia buys six DVDs, how many blouses can she buy?
2. Again referring to Zia, she just got a new job and now her spending allowance increased to
$200. Again, assume DVDs cost $10 and blouses cost $20.
a. When drawing the new budget constraint, did it shift to the left or to the right?
b. If Zia buys three blouses, how many DVDs can see buy now?
c. If Zia buys six DVDs, how many blouses can she buy now?
3. Review the table below and draw a PPF and then answer questions about it. This production
table takes place in North Cox where they are producing beer and mountain bikes.
Production Point
Mountain Bikes
Beer
A
0
100
B
30
90
C
50
70
D
60
40
E
65
0
a. Is this a straight-line PPF or a curved PPF? Based on your answer, what implications
would this have on the production of mountain bikes and beer?
b. The economic developers of North Cox believe there is a more of a market for beer
than mountain bikes. If that is the case, provide a potential production point that
would be allocative efficient for this community.
4. Again refer to the table above regarding the production of beer and mountain bikes for
North Cox in answering these questions.
a. If they decide to change production from A to B, then what is the opportunity
cost of producing 30 more mountain bikes?
b. If they decide to change production from E to D, what is the opportunity cost of
increasing the beer production from 0 to 40?
5. We learned about the economic approach where economists analyze issues by forming
positive and normative statements. Evaluate these statements and determine whether they
are normative or positive.
a. The U.S. should provide more foreign aid to Central America.
b. Lower taxes will lead to more household saving.
c. There needs to be more regulation on financial institutions.
d. When the U.S. increase their deficit spending, interest rates rise.
e. Raising the minimum wage will reduce poverty rates.
f. Countries should embrace free trade.
g. Expanding Medicaid will lead to more people having health insurance.

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