practicequestions1spring2005

practicequestions1spring2005 - Economics 302 Spring 2005...

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Economics 302 Spring 2005 Practice Questions 1 (Covers Chapters 1 and 2 in Mankiw text) 1. Use the following information to answer this set of questions. Year Real GDP in 1990 Prices Price Index 1990 400 100 2000 500 150 a. Calculate the nominal (or money) GDP for 1990 and 2000 using the above information. b. Calculate Real GDP in year 2000 prices using the above data and your calculations in part (a). 2. Use the following information to calculate the labor cost per unit of output in each of the following cases. Wage rate Initially = $10 per hour Output per Labor Hour Initially = 10 units of output 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). b. What is the relationship between labor cost per unit of output and productivity? In your answer explain when labor cost per unit of output decreases and when labor cost per unit of output increases. c. Can real wages in an economy increase if there are no productivity gains? Explain your answer. d. How can labor costs per unit of output be reduced? 3. Use the following assumption and information to answer this set of questions. Assumptions: i. There is no government spending or taxation in this model. ii.
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This note was uploaded on 08/08/2008 for the course ECON 302 taught by Professor Gold during the Spring '07 term at Wisconsin.

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practicequestions1spring2005 - Economics 302 Spring 2005...

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