Introduction to Economics 2

Yanıt Açıklaması: The factors that cause aggregate demand curve to shift right and aggregate supply curve to shift left create one-time price increase.

Yanıt Açıklaması: Economic growth causes the aggregate supply curve to shift to the right.

Yanıt Açıklaması: The WTO, as well as the GATT, has succeeded to reduce the tariffs. However, countries have begun to use non-tariff restrictions instead of tariffs. This preference and increasing implementation of the non-tariff restrictions are mostly referred to new protectionism. In spite of the rules and regulations of the WTO, countries pretend to implement new types of non-tariff restrictions. The WTO is not very efficient in preventing the usage of the nontariff barriers.

Yanıt Açıklaması: Consumers gain by meeting their demands with a lower price and higher quality variety of commodities. Producers gain by producing for a larger market with increased competition. Investors gain by choosing the most profitable investment from all around the globe.

Yanıt Açıklaması: Nominal exchange rate is the rate determined by the demand and supply of the foreign currency. However, the real exchange rate is the rate that considers the price differences, or in other words, the inflation in both countries. Thus, real exchange rate is the nominal exchange rate weighted by the consumer price index of the two countries.

Yanıt Açıklaması: The cost changes that cause the displacement of the aggregate supply curve are called cost or supply shock. Economic growth causes the aggregate supply curve to shift to the right. Full employment is determined by current production factors and technology. Accordingly, if the labor force (or the productivity of the labor force) and capital stock (or the productivity of the capital) increase, the AS curve will shift to the right.

Yanıt Açıklaması: There are 3 functions of Money. These are as follows: Serving as a Unit of Account Serving as a Store of Value Serving as a Medium of Exchange Serving as a Purchasing Power is also mentioned under the heading of Serving as a Store of Value.

Yanıt Açıklaması: Today, WTO is responsible for the global trade rules. Although it has many agreements to regulate the global trade, the main agreement is still the GATT which consists of rules on commodity trade. The WTO agreements not only cover commodity trade but also services trade and intellectual property rights. They set the principles of making a freer trade and the permitted exceptions. They include the commitments of countries to lower the import tariffs and other trade restrictions.

Yanıt Açıklaması: Correct answer is E.

Yanıt Açıklaması: The reason you hold money in your wallet to buy something is that acquisition periods of income are generally not matching with spending periods. You have to hold an amount of money as much as the amount you wish to spend. The other factor determining the amount of money you want to hold is prices.

Yanıt Açıklaması: At the autarky, production possibilities frontier (PPF) and the consumption possibilities frontier (CPF) of a country are identical.

Yanıt Açıklaması: The necessity of double coincidence of wants and uncertainty about the rate of exchange in a barter economy cause inefficiency by preventing specialization in division of labor. Thus, since the barter requires too much time and to bargain other people one by one, it is not a desired way.

Yanıt Açıklaması: Economies of scale exist when the cost of producing a unit of a commodity falls as its output rate increases.

Yanıt Açıklaması: The new trade theories base a great deal of international trade flows on differences in the development and spread of new technologies among the countries, economies of scale and imperfect competition . These are the facts which the early trade theories did not take into consideration.

Yanıt Açıklaması: The marginal product of labor is the increase (change) in the output produced that results in one-unit increase (change) in labor input.

Yanıt Açıklaması: In case of changes in public expenditures and taxes are the same, the numerical value of net multiplier being equal to 1 is called as balanced budget multiplier. Since the value of the multiplier in this case will become 1, then ΔY = (1) x ΔG and ΔY= 100.

Yanıt Açıklaması: Capital and Financial Account: It consists of two sub-accounts, Capital Account and Financial Account. Patent rights, intellectual property rights and licenses are recorded under the Capital Account. It constitutes the smaller part of the whole account. Financial Account is the main sub-account of the Capital and Financial Account.

Yanıt Açıklaması: If there aren’t sufficient additions to capital stock, there will be investment deficit in the economy. Therefore, it creates a reduction capital stock and shifts the aggregate supply curve to the left.

Yanıt Açıklaması: The economic policy is influential on aggregate demand, as it is contractionary or expansionary. When the fiscal policy is applied, the tools used are the government expenditure (G) and the taxes (T), while the money supply (MS) used in the monetary policy. An expanding economic policy is to stimulate the economy by increasing the aggregate demand. We have shown that this goal can be achieved with an increase in government spending or with an increase in money supply and a reduction in taxation. The goal of a contractionary economic policy is to reduce aggregate demand and slow down economic activity. We have determined that this objective can be achieved by a decrease in government expenditures and money supply, and an increase in taxes.

Yanıt Açıklaması: The process in which prices and unemployment increase (means, at the same time, that decreasing production) at the same time is known as stagflation (inflation in stagnation).