Homework 2

Macro

Due Monday, October 12

 

1. You are given the following:

Year	Quantity of Shoes	Price of Shoes	Quantity of Apples	Price of Apples	Quantity of Bananas	Price of Bananas
2007	50	$40	4000	$.50	2000	$1
2008	60	$50	6000	$.60	2200	$2

Base Year = 2007

 

(a)    Calculate nominal GDP for 2007.

 

 

(b)   Calculate nominal GDP for 2008.

 

 

(c)    Does the increase in nominal GDP give an accurate indication of the increase in output? Why or why not?

 

(d)   Calculate real GDP for 2008.

 

 

(e)    Calculate the GDP Deflator for 2008.

 

 

(f)     What does your number in (e) mean?

 

(g)    Calculate the CPI for 2008. (Use 2007 as the base year.)

 

 

 

2. Do problem 12 on page 198.

 

 

 

3. Out of the 4 or 5 spending components for GDP, which one is the largest?  Which one fluctuates the most?

 

 

4. If 75,000 workers are employed and 25,000 workers are unemployed, calculate the unemployment rate.