answerstopracticequestions1spring2005

answerstopracticequestions1spring2005 - Economics 302...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 302 Spring 2005 Answers to Practice Questions 1 (Covers Chapters 1 and 2 in Mankiw text) 1. a. Year Real GDP in 1990 Prices Price Index 1990 400 100 2000 500 150 i. Real GDP =money GDP in the base year ii. Real GDP = [(Money GDP)/(Price Index)] * 100 b. Year Real GDP in 2000 prices Price Index 1990 iv) 600 ii) (100/150)*100 = 66.7 2000 iii) 750 i) (150/150)*100 = 100 To get the answer you first need to recalculate the price index using year 2000 as your base year. Then use the money values from part (a) and the new price index to calculate real GDP using year 2000 prices. i) Base year price index ii) Price index for 1990 using year 2000 as the base year iii) Real GDP = Money GDP in the base year iv) Real GDP in 1990 using year 2000 prices = money GDP in year 1990 divided by the price index for 1990 times 100 2. Productivity Gain Wage Increase Labor cost/Unit of Output 0% 0% i) 0% 10% ii) 0% 20% iii) 10% 0% iv) 10% 10% v) 10% 20% vi) 20% 0% vii) 20% 10% viii) 20% 20% ix) a. Fill in the above table i) through ix). To fill in the table it will be helpful to make a table to organize the necessary data.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Productivity Gain Output Wage Increase Wage Rate Labor Cost/Unit of Output 0% 10 units 0% $10 $1/unit of output 0% 10 units 10% $11 $1.1/unit of output
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

answerstopracticequestions1spring2005 - Economics 302...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online