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Assignment 1

The document contains 6 problems related to calculating economic indicators like GDP, CPI, inflation rates, unemployment rates, production functions, and economic growth rates. Multiple graphs and calculations are required to solve the problems.

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naimur.7566
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14 views

Assignment 1

The document contains 6 problems related to calculating economic indicators like GDP, CPI, inflation rates, unemployment rates, production functions, and economic growth rates. Multiple graphs and calculations are required to solve the problems.

Uploaded by

naimur.7566
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment

1.

Interest income 150


Depreciation 36
Wages 67
Gross private investments 124
Business profits 200
Indirect business taxes 74
Rental income 75
Net export 18
Income from abroad 12
Government purchases 156
Household consumption 304

i. Calculate GDP using the income approach.


ii. Calculate GDP using the expenditure approach.

2.
Year 1 Year 2 Year 3
Basic Market Basket Item No. of Price per Price per Price per
units unit unit unit
Cheese 2 1.75 1.50 1.50
Blue Jeans 2 12 15.5 20.00
Gasoline 10 1.25 1.60 2.70

i. Calculate cost of CPI basket for each year


ii. Calculate CPI for year 2 and year 3 assuming year 1 as base year. Also, interpret the
results.
iii. Calculate inflation rate from year 1 to year 2.
3.

Year 2003 (base year) Year 2004


Steel Wheat Corn Sugar Steel Wheat Corn Sugar
(ton) (bushel) (bushel) (Kg) (ton) (bushel) (bushel) (Kg)
Price ($) 8 3 2 1 9 3 3 2
Quantity 500000 200000 300000 100000 550000 300000 400000 200000

Population 2501 2824

i. Calculate Nominal GDP and real GDP for each year.


ii. Calculate GDP deflator for each year.
iii. Calculate economic growth rate.
iv. Calculate standard of living for each year.
v. Calculate the growth rate of standard of living.
vi. How long would it take for the standard of living to be double, given the growth rate
calculated in question number d?

4. a. Calculate the unemployment rate given the following data:


Adult population = 10 million
Labor force participation rate: 62%
Unemployed persons: 455000
b. Using the following data, compute the unemployment rate, the frictional
unemployment rate, the natural unemployment rate
Structural unemployment rate 3 percent
Cyclical unemployment rate 31.27 percent
Civilian labor force 123 million
Number of employed persons 79 million
5. Use the following tables to work Problems. The first table describes an economy’s labor
market in
2010 and the second table describes its production function in 2010.
Real Wage Rate Labor Hours Supplied Labor Hours Demanded
80 55 15
70 50 20
60 45 25
50 40 30
40 35 35
30 30 40
20 25 45

Labor (Hours) Real GDP


15 1425
20 1800
25 2125
30 2400
35 2625
40 2800
45 2925
50 3000

i.Draw the labor market. What are the equilibrium real wage rate and the quantity of labor
employed in 2010 ?
ii.Draw the aggregate production function. What is the potential GDP in 2010?
Suppose that labor productivity increases in 2010.
iii.What effect does the increased labor productivity have on the demand for labor, the
supply of labor, potential GDP, and real GDP per person? Show in graphs drawn in і and
іі.

6. Venezuela’s real GDP was 57,049 trillion bolivares in 2009 and 60,000 trillion bolivares in 2010.
Venezuela’s population was 28.6 million in 2009 and 29.2 million in 2010. Calculate
i.The economic growth rate.
ii.The growth rate of real GDP per person.
iii.The approximate number of years it takes for real GDP per person in Venezuela to double
if a 2010 growth rate of real GDP per person is maintained.

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