1. Why do economists pay more attention to national economies (for example, the U.S. or Canadian economies) than to state or provincial economies (such as California or Ontario)?
2. Why would the following investment expenditures increase as the interest rate declines? a. Purchases of a new plant and equipment b. Construction of new housing c. Increased inventories
3. Describe the various components of fluctuations in economy activity over time. Because economic activity fluctuates, how is long-term growth possible?
4. Explain why intermediate goods and services usually are not included directly in GDP. Are there any circumstances under which they would be included directly?
5. Terrorist attacks foster instability and may affect productivity over the short and long term. Do you think the September 11, 2001, terrorist attacks on the World Trade Center and the Pentagon affected short- and/or long-term productivity in the United States? Explain your response and show any movements in the PPF.
6. Why is universal acceptability such an important characteristic of money? What other characteristics can you think of that might be important to market participants?
7. Does the overall unemployment rate provide an accurate picture of the impact of unemployment on all U.S. population groups?
8. What are the three important functions of money? Define each of them.
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