Sample_Quiz1_Akey - 5 a Use Y = C I G NX 6 a Apply formula...

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Sample Quiz 1 Answer Key Multiple choice 1 d u = (Labor Force – Employed Workers)/Labor Force, so it’s 9.1% for North, 7.69% for South, 6.38% for East, and 16.7% for West. 2. a Reason: Calculate real GDP (RGDP) as follows RGDP_year_t = Nominal GDP_year_t *20/Deflator_year_t to get RGDP = 1000, 1600, 2000 for 1990, 1991, and 1992, respectively. The growth rate of real GDP in 1991 is thus 60% and in 1992 25% Note: Using 20 in the formula gives us real GDP fixing prices at their 1990 level. We could also use 50 to obtain a series of real GDP at 1991 prices or 80 for real GDP at 1992 prices. Those series would be proportional to each other, and thus the growth rates would be the same. 3. d To see why (a) (b) and (c) are false, see, respectively, p. 14, 15-16, and 24 of topic 1 slides 4. b See p.17 or 21 of Topic 1 slides
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Unformatted text preview: 5. a Use Y = C + I + G + NX 6. a Apply formula on p.17 of topic 1 slides 7. c See Topic 1 slides page 7 Problem (a) Increase in Y = $5,000, the value of the 50 tables produced. Increase in C = $1,500, for the 15 tables bought by consumers. Increase in I = $3,500, for the 30 tables sold to the company and 5 that increase inventories. (b) Increase in GDP = Increase in G = $40,000. This is a government purchase of law enforcement services. (c) Increase in GDP = $0, because nothing is produced. The $20,000 is just a transfer (d) Increase in GDP = Increase in Consumption = $40. The sales services, or added value, of the bike shop counts as a service, and thus, it is consumption. (e) Increase in GDP = $30,000 Increase in C = $80,000 Increase in NX = -$50,000 (because of imports from Canada)...
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