pset1 - Econ 102 Macroeconomic Theory Winter 2007 Mark L.J...

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Econ 102 Mark L.J. Wright Macroeconomic Theory [email protected] Winter 2007 Bunche 9284 Problem Set 1: Measuring the Economy Date Due: Thursday 25th January, 2007 Problem 1 (National Income and Product Accounting) Consider each of the following transactions and indicate whether or not they raise or lower our estimates of Gross Domestic Product. In each case, state the components of GDP a/ected. a. You hire a UCLA undergraduate to clean your pool for $100 per week. b. You marry (or form a civil union with) your pool cleaner and give them $100 for expenses. c. UCLA buys a Humvee and uses it to run a cross campus shuttle. d. The military buys a new Humvee. e. You brew $100 worth of beer in your dorm room and drink it yourself. f. You brew $100 worth of beer in your dorm room and sell it to a friend. g. You brew $100 worth of beer in your dorm room and sell it to Trader Joes (under the label "EconoBrew"). h. UCLA Press prints 100 copies of a book by your economics lecturer and is unable to sell any of them. i. You buy a copy of a book by your economics lecturer from a second hand bookshop. j. You give your economics professor $100 for their birthday. k. You buy your economics professor $100 worth of beer for their birthday. l. You pay an unscrupulous economics TA $100 to sit your Econ 102 °nal exam for you. 1
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Problem 2: (Calculating GDP) As everyone knows, Canadian±s are good at only two things: making maple syrup, and brewing Molsons.
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