Describe the major sources of income and expenditures for households.

Macroeconomics Homework Instructions:

Please answer the following questions.

Your completed Homework assignment should be three (3) FULL pages in length.

All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. All references and citations used must be in APA style.

Chapter 3 Questions:

Describe the major sources of income and expenditures for households.

·        
(Evolution of the Household) Determine whether each of the following would increase or decrease the opportunity costs for mothers who choose not to work outside the home. Explain your answers.

a.      
Higher levels of education for women.

b.     
Higher unemployment rates for women.

c.      
Higher average pay levels for women.

d.     
Lower demand for labor in industries that traditionally employ large numbers of women.

Summarize the seven roles of government in an economy.

·        
(Tax Rates) Suppose taxes are related to income as follows:

Income                        Taxes

$1,000                         $200

$2,000                         $350

$3,000                         $450

a.      
What percentage of income is paid in taxes at each level?

b.     
Is the tax rate progressive, proportional, or regressive?

c.      
What is the marginal tax rate on the first $1,000 of income?  The second $1,000?  The third $1,000?

Chapter 4 Questions:

Explain why a demand curve slopes downward.

·        
(Substitutes and Complements) For each of the following pair of goods, determine whether the goods are substitutes, complements, or unrelated:

a.       
Peanut butter and jelly.

b.      
Private and public transportation.

c.       
Coke and Pepsi.

d.      
Alarm clocks and automobiles.

e.       
Golf clubs and golf balls.

Identify five things which could shift a demand curve to the right or left.

·        
(Demand Shifters) List five things that are held constant along a market demand curve, and identify the change in each that would shift that demand curve to the right – that is, that would increase demand.

Explain why a supply curve usually slopes upward.

·        
(Supply) Why is a firm willing and able to increase the quantity supplied as the product price increases?

Predict the impact of a change in demand or supply on the equilibrium price and quantity.

·        
(Equilibrium) Assume the market for corn is depicted as in the table that appears below.

a.       
Complete the table below.

b.      
What market pressure occurs when quantity demanded exceeds quantity supplied? Explain.

c.       
What market pressure occurs when quantity supplied exceeds quantity demanded? Explain.

d.      
What is the equilibrium price?

e.       
What could change the equilibrium price?

f.       
At each price in the first column of the table below, how much is sold?

Price               Quantity                                 Quantity                                

Per                  Demanded                              Supplied                     Surplus/          Will Price

Bushel             (millions of bushels)              (millions of bushels)  Shortage         Rise or Fall?

$1.80               320                                          200                              ————         —————

2.00                 300                                          230                              ————         —————

2.20                 270                                          270                              ————         —————

2.40                 230                                          300                              ————         —————

2.60                 200                                          330                              ————         —————

2.80                 180                                          350                              ————         —————

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