# HW1_SOL - Economics 314 Suggested Solutions to HW 1 February 1 2009 1 1(a Y = C I G X M = 1000 250 500-30=1720(b N DP = GDP depreciation =Gross

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Economics 314 Suggested Solutions to HW 1 February 1, 2009 1 1. (a) Y = C + I + G + X M = 1000+250+500-30=1720. (b) NDP = GDP depreciation =Gross Investment - Net Investment=1720-(250-220)=1690. (c) Exports = Net Exports+Imports= - 30+50=20. (d) GNP = GDP + Y f = 1720 + 5 . 2 1. GDP GDP /Real GDP * 100 Nominal GDP 1 = GDP GDP * 100. =(100*300)/300=300. 2. GDP Deflator 2 =(900/600)*100. 3. Real GDP 3 =(1500/300)*100=500. Real GDP 4 =(1200/200)*100=600. 3 1. f = P f 99 P f 98 P f 98 = (45 30) = 30 =50%. c = P c 99 P c 98 P c 98 = (25 30) = 30 =25%. 1

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2. CPI 98 = P f 98 Q f 98 + P c 98 Q c 98 P f 98 Q f 98 + P c 98 Q c 98 * 100. = (30)(10)+(20)(5) (30)(10)+(20)(5) 100 = 400 400 100 : =100. Note: In base year, CPI always equals 100. 3. CPI 99 = P f 99 Q f 98 + P c 99 Q c 98 P f 98 Q f 98 + P c 98 Q c 98 * 100. = (45)(10)+(25)(5) (30)(10)+(20)(5) 100 = 575 400 100 . =143.75 4 1. included (service) 2. Not included (produced prior year)
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## This note was uploaded on 04/02/2009 for the course ECON 3140 taught by Professor Mbiekop during the Spring '07 term at Cornell University (Engineering School).

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HW1_SOL - Economics 314 Suggested Solutions to HW 1 February 1 2009 1 1(a Y = C I G X M = 1000 250 500-30=1720(b N DP = GDP depreciation =Gross

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