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Spring 2008 HW _3

# Spring 2008 HW _3 - Colorado School of Mines Homework 3...

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Item 2001 2002 Quantity Price Quantity Price Lobsters 100 \$20 each 110 \$25 each Crabs 25 \$25 each 30 \$30 each Colorado School of Mines – Homework 3 Spring 2008 – Due In Class April 7 Name: All homework must be handed in on time, be typed, and be STAPLED or it will not be accepted. 1. An island economy produces only lobsters and crabs. The table gives the quantities produced and the prices in 2001, and the quantities produced and the prices in 2002. The base year is 2001. Calculate: (1 point each) a. Nominal GDP in 2001. \$2625 b. Nominal GDP in 2002. \$3650 c. The value of 2002 production in 2001 prices. \$2950 d. Percentage increase in production when valued at 2001 prices. 23.73% e. The value of 2001 production in 2002 prices. \$3250 f. Percentage increase in production when valued at 2002 prices. 23.81% g. Real GDP in 2001 and 2002. 2950 h. The GDP deflator in 2002. 123.73 2. If nominal GDP in 1998 was \$8,759.9 billion and real GDP was \$8,165 billion, calculate the GDP deflator in 1998. (4 points)107.29 3. During 2007 on Macro Island, net taxes were \$10 billion; household consumption expenditures were \$45 billion; government expenditures were \$18 billion; capital investments were \$21 billion; and net exports were -\$1.5 billion. Calculate the: (1 point each) a. Total Income 10 billion. b. Total Expenditures 82.5 billion c. Total Value of Production 92.5 billion 4. Sally worked hard all year so that she could go to school full time the following year. She put her savings into a mutual fund that paid a nominal interest rate of 7% a year. The CPI was 165 at the beginning of the year and 177 at the end of the year. What was the real interest that Sally earned? (4 points)6.93 % 5. Amazon.com agreed to pay its workers \$20 an hour in 2005 and \$22 an hour in 2006.

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Spring 2008 HW _3 - Colorado School of Mines Homework 3...

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