1) In which of the three market arenas is each of the following goods traded? (1

Question

1) In which of the three market arenas is each of the following goods traded? (1. The goods and services market, 2. The labor market, 3. The money market ).

                A) U.S Treasury Bonds

                B) An Amazon Kindle

                C) A Harley-Davison Soft tail motorcycle

                D) The business knowledge of Dallas Mavericks%u2019 owner Mark Cuban

                E) Shares of Google stock

                F) The crop-harvesting abilities of an orangen picker in Florida

2) Explain why imports are subtracted in the expenditure approach to calculating GDP (Gross domestic product)?

3) Go to www. bls.org and click on the links for the state and area employment and unemployment. Look at your home state and describe what changes have taken place in the workforce (in this case California). Has the labor force participation rate gone up or down? Are the state%u2019s experiences the same as the rest of the country? Provide an explanation of why your state%u2019s experiences are the same as or different from the rest of the country?

4) The following questions refer to this table:

Aggregate                  Consumption          Planned

Output/ Income                                                             investments

2,000                                     2,100                     300

2,500                                     2,500                     300

3,000                                     2,900                     300

3,500                                     3,300                     300

4,000                                     3,700                     300

4,500                                     4,100                     300

5,000                                     4,500                     300

5,500                                     4,900                     300

A)     At each level of output, calculate saving. At each level of output, calculate unplanned investment (inventory change).

What is likely to happen to aggregate output if the economy produces at each of the levels indicated? What is the equilibrium level output?

5)   For each of the following, determine whether it is an asset or a liability on the accounting books of a bank. Explain why in each case.

Cash in the vault

Demand deposits

Savings deposits

Reserves

Loans

Deposits at the Federal Reserve

Explanation / Answer

1.    A) U.S Treasury Bonds - The goods and services market

                B) An Amazon Kindle-The goods and services market

                C) A Harley-Davison Soft tail motorcycle-The goods and services market

                D) The business knowledge of Dallas Mavericks%u2019 owner Mark Cuban-The Labor market

                E) Shares of Google stock-The goods and services market

                F) The crop-harvesting abilities of an orangen picker in Florida-The labor market

2.Imports are spending on final goods not produced within the territory of a country. The wealth goes elsewhere. So, it is not a part of the GDP.

5.   For each of the following, determine whether it is an asset or a liability on the accounting books of a bank. Explain why in each case.

Cash in the vault -Asset -

Demand deposits- Liabilities -Has to given back to the depositors

Savings deposits- Liabilities -Has to given back to the depositors

Reserves - Asset - No obligation to give to anybody. It is meant to deal with uncertain situations.

Loans - Asset - To be received from the borrower at a later date

Deposits at the Federal Reserve - asset -it can be converted into federal reserv currencies later on.

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