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Question 1 4 / 4 pts Thank you for choosing Mike Freimuth's ECON 202 class

Economics

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Question 1

4 / 4 pts

Thank you for choosing Mike Freimuth's ECON 202 class.  It is our pleasure to serve you.  As a special thank you, please choose a free gift below.

Correct!  

Free points!

 

 

Question 2

2 / 2 pts

Imagine you are a farmer.  You plant corn in one period and then harvest it in the next.  The following schedule tells how much you produce in the next period (output) depending on how much you plant (investment). 

Investment          1             2             3              4               5             6               7              8              9               10            11

Output                   5             8             10           11.7       13.2       14.6       15.9       17.1       18.2        19.25     20.25

Now imagine that you don't actually have any corn to plant.  You need to borrow it.  Luckily, there is a market for loanable corn.  In the market there is an interest rate.  For each unit of corn you borrow in the first period, you need to pay back 1.2 units in the following period.  (Since this is measured in "real goods" we would call it a real interest rate of 0.2 or 20%.)  Assume that you want to maximize the profit you have left in the next period (in other words, you want to have the most corn left after you pay back the loan.)  In this case, how much should you borrow/invest?  (Answer should be an integer with no units.  There are two answers I will accept since they give the same profit.)

Correct!

Correct Answers

7 (with margin: 0)

8 (with margin: 0)

 

Question 3

2 / 2 pts

Now, same situation but the real interest rate is 40%.  How many do you borrow?  (Here is the schedule again for reference.)

Investment          1             2             3               4              5              6              7              8              9              10            11

Output                   5             8             10           11.7       13.2       14.6       15.9       17.1       18.2       19.25     20.25

Correct!

Correct Answers

5 (with margin: 0)

6 (with margin: 0)

 

Question 4

2 / 2 pts

Pete grows wheat and sells it to Roger for $2.  Then Roger turns it into flour and sells it to John for $3.  John takes the flour and also some sugar which he bought for $1 and eggs that he bought for $1.50 and bakes a cake which he sells to Keith for $10.  Keith eats the cake and then drives his car into a swimming pool for some reason.  How much is added to nominal GDP here?

(Don't worry about the cost of the car and the swimming pool, that's just a little joke..... Also don't put a dollar sign in your answer.)

Correct!

Correct Answers

10 (with margin: 0)