# HW1_SOL - Economics 314 Suggested Solutions to HW 1...

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Economics 314 Suggested Solutions to HW 1 September 18, 2008 1 [Page 30, 3, NQ 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 [page 31, 3, (NQ 2)] (a) GDP Deﬂator=Nominal GDP /Real GDP * 100 Nominal GDP 1 = GDP Deﬂator*Real GDP * 100. =(100*300)/300=300. (b) GDP Deflator 2 =(900/600)*100. (c) Real GDP 3 =(1500/300)*100=500. Real GDP 4 =(1200/200)*100=600. 3 [page 31, 3, (NQ 3)] (a) π f = P f 99 - P f 98 P f 98 = (45 - 30) / 30=50%. π c = P c 99 - P c 98 P c 98 = (25 - 30) / 30=25%. 1

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(b) 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. (c) 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)
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## This note was uploaded on 10/19/2008 for the course ECON 3140 taught by Professor Mbiekop during the Fall '07 term at Cornell University (Engineering School).

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HW1_SOL - Economics 314 Suggested Solutions to HW 1...

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