Krishna Dayle Requina

Learning Activities: Assignment

1. Why is it important to measure both a nation’s GNP and its GNP per capita? How should the
country’s price level be taken into account in measuring these quantities over time? (10 pts.)
- Policymakers rely on Gross National Product as one of the important economic indicators.
GNP produces crucial information on manufacturing, savings, investments, employment,
production outputs of major companies, and other economic variables. Policymakers use
this information in preparing policy papers that legislators use to make laws. Economists
rely on the GNP data to solve national problems such as inflation and poverty.

When calculating the amount of income earned by a country’s residents regardless of their
location, GNP becomes a more reliable indicator than GDP. In the globalized economy,
individuals enjoy many opportunities to earn an income, both from domestic and foreign
sources. When measuring such broad data, GNP provides information that other
productivity measures do not include. If residents of a country were limited to domestic
sources of income, GNP would be equal to GDP, and it would be less valuable to the
government and policymakers.

The information provided by GNP also helps in analyzing the balance of payments. The
balance of payments is determined by the difference between a country’s exports to foreign
countries and the value of the products and services imported. A balance of payments
deficit means that the country imports more goods and services than the value of exports. A
balance of payments surplus means that the value of the country’s exports is higher than
the imports.

2. Distinguish among the terms “first world”, “second world”, “third world” and “fourthworld”.
Provide your own examples of nations that fit each description. (10 pts.)
- - The modern definition of “first world” is used to classify countries that are highly
industrialized and with advanced economies. Common metrics used to identify countries
that are part of the First World include the Human Development Index, GDP per capita,
literacy rate, and life expectancy.For example, a first-world nation might be described as
aligned or amicable with Western countries or those in the Northern Hemisphere; highly
industrialized; possessing a low poverty rate, and/or high accessibility to modern resources
and infrastructure like JAPAN. The term “Second World country” is a term used during the
Cold War to refer to the industrial socialist states under the influence of the Soviet Union.th
- There existed an incredibly large and quite powerful nation called the Soviet Union (USSR). It
consisted of what is now Russia as its core member, with the capital of the Soviet Union
being Moscow, Russia. Third World” is an outdated and derogatory phrase that has been
used historically to describe a class of economically developing nations. It is part of a four-
part segmentation that was used to describe the world’s economies by economic
 status.”Third World” is an outdated and derogatory phrase that has been used historically to
describe a class of economically developing nations. It is part of a four-part segmentation
that was used to describe the world’s economies by economic status. One example is the
China. A fourth world is a group of nations especially in Africa and Asia characterized by
extremely low per capita income and an absence of valuable natural resources.
-

3. Why does the demand curve slope downward? (10 pts.)

- The demand curve slopes downwards because as we lower the price of x, the demanded
starts growing. At a lower price, purchasers have an extra income to spend on buying the
same good, so they can buy greater of it. This ends in an inverse relationship between price
and demand. This relation, in economics, is called the regulation of demand. It states that
(other things being identical), “as price falls, the demand will increase and vice versa.”

4. Why might the supply curve bend backward? (10 pts.)

- A typical supply curve shows an increase in supply as wages rise. It slopes from left to right.
However, in labour markets, we can often witness a backward bending supply curve. This
means after a certain point, higher wages can lead to a decline in labour supply. This occurs
when higher wages encourage workers to work less and enjoy more leisure time.

5. Suppose the demand curve shifts to D1. What are some of the reasons that such a shift might
occur? Specifically, why do wages rise? (10 pts.)
- The shift in the quantity demanded of the product that labor produces depends on some
factors: a change in the manufacturing process that uses more or less labor; and a change in
government policy that affects the quantity of labor that firms want to hire at a given wage
are all factors that can shift the demand curve for labor.
6. Suppose that the demand curve shifts further, to D2. There are now two intersections of the
supply and demand curves. Which intersection is the final equilibrium? (10 pts.)
- As shown in the figure, the final intersection can be seen in the middle of D1.

7. What factors could cause the supply curve shift to S1? If demand remains at D2, what happens
to equilibrium wages and employment?
Income is not the only factor that causes a shift in demand. Other factors that change demand
include tastes and preferences, the composition or size of the population, the prices of related
goods, and even expectations. A change in any one of the underlying factors that determine
what quantity people are willing to buy at a given price will cause a shift in demand. Graphically,
the new demand curve lies either to the right (an increase) or to the left (a decrease) of the
original demand curve.duction in supply will raise wages; an increase in supply or a reduction in
demand will lower them. The demand curve depends on the marginal product of labor and the
price of the good labor produces. If the demand curve shifts to the right, either because
productivity or the price of output has increased, wages will be pushed up.In the long run the
supply of labor is simply a function of the population size, but in the short run it depends on
variables such as worker preferences, the skills and training a job requires, and wages available
in alternative occupations.