Examples

The following examples are derived from actual documented problem solving activities that have been tested and used with students. These examples should be informative to those who would like to begin using this technique.

• Identifying a Change in Demand and Its Impact - The determinants of demand are explored along with the impact to the demand curve and the resulting change to the equilibrium price level.

• International Trade and Comparative Advantage - The concept of comparative advantage is used to make a decision about specialization and trade. The microeconomic impact is also included.

• Calculating Equilibrium Output - The difference between potential GDP and equilibrium GDP is explored.

• Adjustment of Output and Inflation to a Demand Shock - The role of nominal aggregate demand and inflation expectations in determining the level of output and the inflation rate are examined.

• Foreign Exchange Rates - Supply and Demand - Four events that may effect a country's exchange rate are given. Students determine if the currency would appreciate or depreciate as a result.

• Price Elasticity of Demand - The price elasticity of demand is used to determine the impact of a price decrease on total revenue.

• The Long Run Competitive Market - Given a competitive market structure, economic profits are explored along with the market adjustments and the long-run equilibrium.

• Calculating the Unemployment Rate - Knowledge about the labor force, the unemployed and the employed are used to determine the unemployment rate.

• Calculating Bank Reserves - Knowledge of the banking system is used to determine total reserves, required reserves and excess reserves, and how they are related to each other.

• Determining the Tax Structure - Income tax rates are calculated in order to determine the tax structure.

• Gross Domestic Product Versus Gross National Product -The difference between GDP and GNP is emphasized by separating production into two groups.

• Calculating Gross Domestic Product - The calculation of GDP is used to emphasize the components that are included and those that are not.

• The Impact of a Minimum Wage - A minimum wage is examined in terms of its impact on the quantity of labor supplied and the quantity of labor demanded.