Key to sample problems for test 3

The sample problems are available on the I-drive. Please note that if you downloaded it before 1:50 p.m. on Tuesday, there were a few changes in wording on some problems.

Cautionary note: Although in class it was mentioned that there are two types of bank reserves, required and excess, in our examples we did not distinguish between the two. That distinction becomes important in the next chapter. So a few of the problems use this terminology "required" and "excess". I do not plan to ask any questions which make use of this difference. Just know that there is a difference at this point.

Two other notes: When discussing "productivity", the L is considered Labor. Our use in class has been that Labor was a "person". But it can also mean "unit of worker effort", meaning like "an hour of labor". That comes into play on 31 and 33. The distinction is merely technical, but does not alter our understanding.

Here is the key. Please IM me or email me if you think there are any errors. I'll be able to post updates on this weblog.

1-C, 2-D, 3-B*, 4-D, 5-A,
6-C**, 7-C, 8-C, 9-A, 10-A,
11-B, 12-A, 13-D, 14-A, 15-B, 16-B,
17-C, 18-C, 19-C, 20-A, 21-C, 22-C,
23-D, 24-A, 25-D, 26-B, 27-B,
28-B, 29-D, 30-D, 31-C, 32-A, 33-A,
34-B, 35-D, 36-A, 37-B, 38-A, 39-D,
40-C, 41-C, 42-B, 43-C, 44-A

*B and C look very similar. But B is the best because it fits the definition of GDP (C uses the definition of GNP)

**sorry for the repeat.

Also, sorry for all the inflation calculation questions. As I say, these are from previous tests. I want to focus the discussion of CPI not so much as how to calculate one or calculate an inflation rate, but how the CPI aims (and fails) to capture measure of the price level.

Watch this site for updates.

Test 2 results and scale

Here is some information on scores for test 2. It should be useful in interpreting your score.

First, some descriptive statistics:

mean = 28.475 out of 40 possible points (71.19%)
median = 28 (70%)
mode = 30 (75%)
standard deviation = 5.4 points (13.5%)

So, you can use the following scale as a guide for interpreting your score:

A: 33.5 and higher (3)
B: 28 to 33 (7)
C: 22 to 27.5 (8)
D: 17 to 21.5 (1)
F: 16.5 and below (1)

The number in parentheses is the frequency of observations in that range.

****************************************************************************

The grade distribution at the halfway mark:

On your score sheet there is a number written in red ink between the value of 0 and 47. That figure is the number of points you have earned up through the second test and 4th homework.

To see how that figure is calculated, you need to see the information on the syllabus.

Each test is worth 20 percentage points. To calculate how many of those 20 you've actually earned, you take your test score (the raw score) and divide it by 40 (the total possible points). That will yield a value between 0 and 1. Multiply that by 20 to get the points out of 20.

e.g., if you got a 30 out of 40 on the first test, the amount of the 20 points you get is:

(30/40) x 20 = .75 x 20 = 15. If you got 40 out of 40 you get all 20 points.

So do that for both tests. Then add your points on the 4 homework assignments. Problem sets 1 and 4 were scored out of 2 points, problem sets 2 and 3 were scored out of one. Maximum homework points so far is 6 points. Then include one (1) participation credit point if you were in class on July 15 (the day after the first test). In an earlier blog post it was noted that those in attendance that day get one point (out of the possible 5) of participation credit.

So total possible points earned so far is 47.

You need to convert your points to a percentage. Take your points so far (in the red ink) and divide by 47 (then multiply by 100 to put into percent).

Use the following scale (in terms of percent) to see what your projected grade is at this point.

A: 84% and higher
B: 73 - 83.9%
C: 62 - 72.9%
D: 51 - 61.9%
F: below 51%

This is based on an average of 73.2% and a standard deviation of 11.1%.

Good luck with the remainder of the course.

Answer key to sample problems for test 2

Here is the key to the sample problems on the I-drive. I realize some of them are difficult. But I think if you study these and master these you should do ok. You should work on the problems, then check your score. Then go back and figure out why you got an answer wrong. (Also, if you knew you were only guessing on a problem, figure out why it is correct.)

Please let me know by email or AIM if you think any of these are wrong. I'll try to be on AIM tonight (screen name CinciDood) if you have any questions.

1-A, 2-B, 3-B, 4-C*, 5-B, 6-A,
7-A, 8-B, 9-D, 10-C,
11-D, 12-C, 13-C, 14-B, 15-B, 16-C,
17-A**, 18-C, 19-B, 20-B, 21-C,
22-C, 23-C, 24-C, 25-D, 26-D, 27-D, 28-B,
29-C, 30-D, 30-A (yes, two 30s, sorry), 31-B, 32-B, 33-B
34-D***, 35-D, 36-C, 37-B, 38-B, 39-C,
40-C, 41-C, 42-A, 43-C, 44-C, 45-B

*4-no, it is not D. If the price of getwids falls, the quantity demanded will increase, but we don't say demand increases. This is a movement along a demand curve, not a change in the position of the demand curve. So B is NOT one of the answers. But C is, since you are told the two goods are substitutes.
**7--yes, this is difficult. The "increased returns" in the other market would cause some producers to stop making one product in order to make something else which is more profitable. So supply of a good can fall when the producers shift to produce other goods.

***34--yes, another tough one. But think about it. You need to think arithmetically. The insight is in the math.

In several problems the term "discouraged worker" is mentioned. Although not discussed in class the concept is simple. A discouraged worker is someone who is actually NOT working (hence the term is a bit of a misnomer) and they have STOPPED looking for work. They stop because no one is hiring for the work they can do. So when you stop looking for work, say you just give up looking, you are technically not employed or unemployed. You are out of the labor force. So when using the concept of "unemployment rate" as a measure of the unemployment problem, the unemployment rate fails to capture this discouraged worker effect.

Here are the answers to the two problems on page 4 of the review sheet (also found on the I-drive):

1. A. Labor force = number employed + number unemployed
45,000 + 5,000 = 50,000

B. LFP = labor force / working age population. Labor force is 50,000.

working age population= total population (number of inhabitants) minus those too YOUNG to work (but don't subtract off those "too old to work" That's a tricky distractor.)

so working age population = 100,000 - 15,000 = 85,000.

so LFP = (50,000 / 85,000) = 58.8%

C. Unemployment rate = (number unemployed / labor force)

(5,000 / 50,000) = .10 or 10%

D. Discouraged workers are those who have given up looking for work. 10,000 people.

2. Ok, I was having a tough time drawing the picture and uploading it in this dang blogger.

See the solution on the I-drive.

The non-picture version is as follows:

A. If the wage is forced above equilibrium, it will create an excess supply of labor. That is, there is unemployment in that unionized market.

B. Since people are unemployed in the union market, people will go to the non-union market looking for work. The supply of labor increases. The equilibrium wage will fall below $8.50.

Class on Wednesday 7/16

We began discussing the functioning of markets. The relative readings are from Chapter 4 of the Taylor text.

I thank all of you who showed up to class today. However, there was a very large drop off in attendance today. Some may think that the day after a test is a blow off day, but in my classes, in particularly in the summer, there are few, if any, wasted days. So much to talk about, so little time.

If you missed class on Wednesday you missed a good discussion of test results (see earlier entry) and you missed a very thorough discussion of the demand side of the market. Word up people: this material does NOT get any easier. It gets increasingly difficult. Missing days is to your own detriment. (If I didn't call you out on it I wouldn't be doing my job.)

Everyone who attended class on Wednesday receives one point participation credit.

There was no homework assignment for Thursday.

Test 1 scores

Here is some information on scores for test 1. It should be useful in interpreting your score.

First, some descriptive statistics:

mean = 29.21 out of 40 possible points (73.04%)
median = 29.5 (73.75%)
mode = 34 (85%)
standard deviation = 4.9 points (12.28%)

The mean is the average (sum all scores and divide by the number of observations). median is the middle score, found by sorting scores highest to lowest (or lowest to highest, doesn't matter) and finding the score in the middle (in the event of an even number of observations, take the middle two scores and find the average of those two scores). The mode is the most frequently occurring observation. These are all measures of "central tendency" or average (more broadly speaking than just the arithmetic mean). Ideally, these three measures should be close together. Certainly the mean and median are close, but in this case, the mode is very different. But for a few reasons (small sample size and the debatable assumption of "normality") the mode is probably not going to be a reliable statistic for our purposes.

The standard deviation is a measure of how the scores are distributed around the mean. The higher the number, the greater the dispersion.

My typical targets are a mean and median near 80%. So this test average is a bit low. That tells me that either the test was difficult or many people were not prepared. Or some combination of the two. Regardless, since every test is an independent event and that every newly created test has an inherent bias (this particularly applies to multiple-choice dominated tests), these statistics can assist me in figuring out how people did, correcting for the degree of difficulty.

So typically, I will take some measure of the middle (mean or median typically) as the break between the Bs and the Cs. Then going up one standard deviation from the mean, I can find a break between the As and the Bs. Similarly, I can go down one standard deviation from the mean to find the break between the Ds and Cs. Further, going down a second standard deviation from the mean I can find the break between the Ds and the Fs.

So, you can use the following scale as a guide for interpreting your score:

A: 34 and higher (5)
B: 29.5 to 33.5 (6)
C: 24.5 to 29 (7)
D: 19.5 to 24 (3)
F: 19 and below (0)

The number in parentheses is the frequency of observations in that range. So no one is in the F range. And the number of As and Bs is greater than the number of Cs and Ds.

But please take note: Letter grades are not recorded, only your score. Your score is weighted by the number of points on the test (40) and the weighting in your overall grade (20%). So the only letter grade you ever really get is the final grade for the course. Hence, I do not write a letter grade on your test. I just give you the raw score. But as you've seen here I've painstakingly tried to explain your score to you.

After the next test I'll give you an overall score for the course so far. It is fair that when there is a "curve" that you have some clear idea of how you are performing.

Good luck with the rest of the course.

Test 1 Review Info

The study guide and some sample multiple choice problems are located on the I-drive. The key to the sample multiple choice problems has already been posted. (See earlier post.)

Answer key to sample problems for test 1

Here is the key to the sample problems for test one. Pay attention to some of the comments since they are probably worthy of some explanation, especially since these problems are drawn from past tests and may not accurately reflect our class discussions.

1-A, 2-C, 3-D, 4-D, 5-B, 6-A, 7-D,
8-A, 9-A, 10-B, 11-C*, 12-A*, 13-B, 14-B,
15-B, 16-C**, 17-C**, 18-B, 19-D, 20-A,
21-D, 22-D, 23-D, 24-C, 25-C, 26-A,
27-B, 28-C, 29-D***, 30-A, 31-B, 32-B, 33-B,
34-C, 35-C, 36-B, 37-B, 38-C,
39-D, 40-D, 41-C, 42-D,
43-A, 44-B, 45-A, 46-B,
47-B, 48-A, 49-D, 50-D****,
51-B, 52-B, 53-B, 54-D, 55-D, 56-B,
57-C, 58-A, 59-C, 60-A or D.*****

Sometimes I make typos on these keys so if you think anything is wrong please email or IM me. I'll check it out.

The comments below refer to the key above.

*11 and 12 use the terms "government transfers". Although I did not discuss it in class you should have picked this up in the readings. What is a government transfer? It is a payment made to someone (a household or a firm) for which NO good or service is rendered in return. A subsidy to a business is a transfer payment. Food stamps are a transfer payment. The "economic stimulus checks" many of us got this summer are transfer payments. Why don't we count those? Because the spending gets picked up in some other category (if we spent our checks on clothes, it would be consumption, unless we bought them from China then it would be an import). In sum: GDP does NOT count government transfers. It counts only its spending on goods and services.

**16 and 17. Given the wording of these problems, using terminology like "market basket" may be confusing. That is because this terminology is used to describe calculating a price index like the Consumer Price Index (CPI). That discussion is a later chapter. So you should ignore those problems. In an updated version of the sample test, I crossed those problems out. Although you may be able to figure them out. For this first test, any references to inflation will come in the GDP deflator terminology.

***29. I don't like the wording of this problem. I think C is the best answer, but A may also be acceptable. So if A and C are possible answers, then the correct response would be D. I'll try to keep from having unclear phrasing.

**** 50. D is the answer. C would suggest that the opportunity cost is decreasing. But we know a bowed out PPF shows increasing opportunity cost. If there was an alternative, say, E, that says "decrease at an increasing rate" it would be the best answer. Here, D is the best.

*****60. The Taylor text separates the financial market and the resource market. However, in class, I combined the two. If I were to give you this problem I'd have to accept both A and D. If it was just Taylor, it would be A. If it was just me, it would be D.

Hint for HW #2

For some of the problems you need to find real GDP. If you have nominal GDP and the price index (the GDP deflator), you can find real GDP.

If we know:

Nominal GDP
-------------- x 100 = GDP deflator
Real GDP

Then an algebraic manipulation of the above equation gives us:

Nominal GDP
-------------- x 100 = Real GDP
GDP deflator

If, on the other hand, you are given real GDP and the price index, you can find nominal GDP by rearranging that first equation to

Real GDP x GDP deflator
-------------------------- = nominal GDP
100

Algebra comes in handy in our understanding of economic relationships.

Note how it asks for real GDP in 1996 prices. A common inquiry from students is "I don't know what nominal GDP or the price index was in 1996. Well, that doesn't matter. The point is since the deflator is in terms of prices that prevailed in 1996 already (it is the stated "base year"), the real GDP will be in 1996 dollars. (And you can also figure out that the deflator in 1996 is going to equal 100 anyway.)

I drive

If you are needing to "map" your on-campus PC or use a web browser from home to get to the I-drive, you can get information and assistance from the following link:

http://old.www.iup.edu/ats/sts/login/index.htm

I hope that helps.

Summer 2008

Welcome to the class weblog for Econ 121-002 Summer II 2008.

You will find occasional announcements, hints for homeworks, and interesting links. You should bookmark this site if you are using your own computer. You can look though earlier blog entries to see the type of information that is posted on this blog site (but you are not responsible for being familiar with any earlier posts).

More info will be posted later.