Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 3, Problem 3.3.5PA
To determine
Diamond and water paradox.
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To say that “there is a scarcity of diamond” means that
Suppose the following transactions occur during the current year:
1. Darnell orders 50 bottles of wine from a French distributor at a price of $30 per bottle.
2. A U.S. company sells 300 spark plugs to a Korean company at $5.00 per spark plug.
3. Jacques, a U.S. citizen, pays $670 for a skateboard he orders from Wally's (a U.S. company).
Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current
year.
Hint: Be sure to enter a "0" if none of the transactions listed are included in a given category and to enter a minus sign when the balance is negative.
Consumption
Investment
Government Purchases
Imports
Exports
Net Exports
Gross Domestic Product (GDP)
Amount
(Dollars)
Using money creation to pay for government spending
Consider Arcadia, a hypothetical country that produces only crab cakes. In 2020, a crab cake is priced at $5.00.
Complete the first row of the table with the quantity of crab cakes that can be bought with $700.
Hint: In this problem, assume it is not possible to buy a fraction of a crab cake, and always round down to the nearest whole crab cake. For example, if your calculations result in 1.5 crab cakes, the answer should be 1 crab cake.
Year
Pieces of Crab Cake
Crab Cakes Bought with $700
(Dollars)
Quantity
2020
5.00
2021
Suppose the government of Arcadia cannot raise sufficient tax revenue to pay its debts. In order to meet its debt obligations, the government prints money. As a result, the money supply rises by 50% by 2021.
Assuming monetary neutrality holds, complete the second row of the table with the new price of a crab cake and the new quantity of crab cakes that can be…
Chapter 3 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 3 - Prob. 1TCCh. 3 - Prob. 2TCCh. 3 - Prob. 3.1.1RQCh. 3 - Prob. 3.1.2RQCh. 3 - Prob. 3.1.3RQCh. 3 - Prob. 3.1.4RQCh. 3 - Prob. 3.1.5RQCh. 3 - Prob. 3.1.6PACh. 3 - Prob. 3.1.7PACh. 3 - Prob. 3.1.8PA
Ch. 3 - Prob. 3.1.9PACh. 3 - Prob. 3.1.10PACh. 3 - Prob. 3.1.11PACh. 3 - Prob. 3.1.12PACh. 3 - Prob. 3.1.13PACh. 3 - Prob. 3.1.14PACh. 3 - Prob. 3.1.15PACh. 3 - Prob. 3.1.16PACh. 3 - Prob. 3.1.17PACh. 3 - Prob. 3.2.1RQCh. 3 - Prob. 3.2.2RQCh. 3 - Prob. 3.2.3RQCh. 3 - Prob. 3.2.4PACh. 3 - Prob. 3.2.5PACh. 3 - Prob. 3.2.6PACh. 3 - Prob. 3.2.7PACh. 3 - Prob. 3.2.8PACh. 3 - Prob. 3.2.9PACh. 3 - Prob. 3.3.1RQCh. 3 - Prob. 3.3.2RQCh. 3 - Prob. 3.3.3RQCh. 3 - Prob. 3.3.4PACh. 3 - Prob. 3.3.5PACh. 3 - Prob. 3.3.6PACh. 3 - Prob. 3.3.7PACh. 3 - Prob. 3.3.8PACh. 3 - Prob. 3.3.9PACh. 3 - Prob. 3.4.1RQCh. 3 - Prob. 3.4.2RQCh. 3 - Prob. 3.4.3PACh. 3 - Prob. 3.4.4PACh. 3 - Prob. 3.4.5PACh. 3 - Prob. 3.4.6PACh. 3 - Prob. 3.4.7PACh. 3 - Prob. 3.4.8PACh. 3 - Prob. 3.4.9PACh. 3 - Prob. 3.4.10PACh. 3 - Prob. 3.4.11PACh. 3 - Prob. 3.4.12PACh. 3 - Prob. 3.4.13PACh. 3 - Prob. 3.4.14PACh. 3 - Prob. 3.4.15PACh. 3 - Prob. 3.4.16PACh. 3 - Prob. 3.4.17PACh. 3 - Prob. 3.4.18PACh. 3 - Prob. 3.3CTE
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