ECO202Y1 Study Guide - Midterm Guide: Final Good, Price Level, Longrun
Document Summary
Term test 1 (1) [6 points] for each of the following transactions that took place this year, state whether the transaction is counted in the this year"s gdp or not. Answer: many possible answers : consumption is a better measure of welfare; marginal propensities to consume vary widely across countries and time periods. It doesn"t include leisure; hours worked per capita varies widely across countries and time periods. Income may be unequally distributed; income inequality varies widely across countries and time periods. It doesn"t take health/life expectancy into account, which also affect welfare. (3) [10 points] thailand is a major world producer of two things: rice and computer hard drives. In 2011, there was a flood that all but halted thai hard drive production for several months. This caused a worldwide hard drive shortage, driving up hard drive prices dramatically. Thus, between 2010 and 2011, thai hard drive output fell but the price of hard drives rose.
