ECON 104 Macroeconomics Quiz 2 Homework 02 PRACTICE QUESTIONS AND ANSWERS

Homework 02  Due Feb 4 at 11:59pm  Points 100  Questions 34  Available until Feb 5 at 4am  Time Limit None Instructions Homework 02 Lessons 03 and 04 100 points This homework is composed of multiple choice, fill-in-the-blank and true/false questions. Select or enter your responses for each question. There is no time limit. It will be available for review starting the day after the assignment is due. This quiz was locked Feb 5 at 4am. Attempt History Attempt Time Score LATEST Attempt 1 4,982 minutes 73 out of 100 Score for this quiz: 73 out of 100 Submitted Feb 2 at 10:32pm This attempt took 4,982 minutes. Part 1: 32 questions at 3 points each for a total of 96 points FOR FILL-IN-THE-BLANK questions: If your answer is in decimal form, round to 2 decimal places. For example, if your answer is .412, enter it into the fill-in-the-blank as .41, or if your answer is 1.415, enter it into the fill-in-the-blank as 1.42. If there are no decimals in your answer, you will simply enter the number; so if your answer is 2, enter 2 with no decimals. Do not enter any extra spaces, do not enter commas or $ or % symbols. Question 1 3 / 3 pts Use the information below to answer questions 1-6 Consider an economy that produces only two goods: fresh apricots and dried apricots. In this economy, the technology of producing dried apricots is to place fresh apricots on special racks and allow them to dry in the sun. Fannie’s Farms is the only company that grows fresh apricots, while Darryl’s Dried Victuals is the only producer of dried apricots. Fannie’s sells some of its apricots directly to consumers for consumption. The relevant revenue and cost information for each of the two firms in the economy is given below: Darryl's Dried Victuals Revenue from selling dried apricots: $2,300,000 Cost of buying fresh apricots from Fannie’s: 1,200,000 Interest on funds borrowed to buy drying racks: 250,000 Wages paid to employees 600,000 Taxes 100,000 Fannie’s Farms Revenue from selling fresh apricots: $2,000,000 Rent on land (including apricot trees) 300,000 Wages to employees 1,200,000 Taxes 200,000 Darryl's profit from selling dried apricots is: $300,000 $310,000 $100,000 Correct! $150,000 None of these are correct 2,300,000-1,200,000-250,000-600,000-100,000 = 150,000 Question 2 3 / 3 pts Fannie’s profit from selling fresh apricots is: Correct! $300,000 $100,000 $310,000 $150,000 None of these are correct 2,000,000-300,000-1,200,000-200,000= 300,000 Question 3 3 / 3 pts Use the income approach to calculate nominal GDP. Fill in the blanks in the table below. Enter numbers with no commas, no dollar signs and no decimals. For example, if your answer is $12,000 you would enter 12000 into the appropriate box. a. Total wages b. Interest c. Rent d.Total profit* e. Total taxes Nominal GDP =(a+b+c+d+e) *hint: get total profit by adding your answers for #1 and #2! Answer 1: Correct! Answer 2: Correct! Answer 3: Correct! Answer 4: Correct! Answer 5: Correct! Answer 6: Correct! Question 4 3 / 3 pts Now let’s use the expenditure approach to calculate nominal GDP. So here we will add up all consumer spending on FINAL goods in this economy. Remember that the final goods in this economy are fresh apricots and also dried apricots. We have to be careful not to double count here though because some of the fresh apricots produced by Fannie are used by Darryl to make dried apricots. So first we find out how much money consumers spent on each of the final goods: How much money was spent by consumers on Fannie’s fresh apricots? $1,200,000 None of these are correct $2,300,000 $2,000,000 Correct! $800,000 Some of Fannie’s apricots are sold to Darryl at a cost of $1,200,000 and the remainder are sold as final goods to consumers. Fannie’s revenues are $2,000,000 and Darryl buys $1,200,000 worth of apricots from Fannie, so $800,000 worth of apricots are sold as FINAL goods to consumers.