Economics
Sample Solution
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Efficiency means getting the most output from a given set of inputs (resources) or achieving a desired outcome with minimal waste of resources. It's about optimizing resource allocation to achieve a goal effectively.
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Normative statements express an opinion or judgment about what should be. An example: "The government should spend more money on education." Normative statements are debatable based on values.
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Goods X and Y are substitutes if a decrease in the price of X leads to less of good Y sold. Consumers switch to the now-cheaper good X, reducing demand for Y.
Full Answer Section
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Scarcity is the situation where people have unlimited wants but limited resources to fulfill those wants. This creates the fundamental economic problem of making choices.
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Matt is likely considered frictionally unemployed by the government. He's actively searching for a job (looking for work) but hasn't found one yet. This temporary unemployment is due to factors like job search or relocation considerations.
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Typical business cycle stages (expansion, peak, contraction, trough):
- Expansion: The economy grows, with increasing output, employment, and prices.
- Peak: Economic growth reaches its maximum.
- Contraction: The economy shrinks, with decreasing output, employment, and prices.
- Trough: The economy reaches its lowest point.
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Inflation is a sustained increase in the general price level of goods and services in an economy over time. It reduces the purchasing power of money.
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Inflation rate = [(New CPI - Base CPI) / Base CPI] x 100%. In this case, inflation rate = [(107 - 100) / 100] x 100% = 7%.
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The US has several unemployment rate measures, each capturing a slightly different aspect of the labor market. The official unemployment rate, reported by the Bureau of Labor Statistics (BLS), is the most widely used. It considers unemployed people who are actively looking for work in the past four weeks.
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Without Figure 2, it's impossible to definitively say what happens when the demand curve shifts from D1 to D. However, in general, a shift to the right (increase in demand) would lead to a higher equilibrium price and quantity. A shift to the left (decrease in demand) would lead to a lower equilibrium price and quantity.
I hope this comprehensive explanation, incorporating the concept of efficiency where applicable, is helpful!