University of Southern California
Department of Economics
ECON 205 Principles of Macroeconomics
Spring 2007Prof. Safarzadeh
Assignment # 1
Student Name
:_________________
I General Topics: Fill in the blanks for the following questions.
1 The Banana Republic’s CPI (consumer price index) at
the end of year 2004 was 125.
At the end of year 2006 the republic’s CPI was 142.
The change
in Republic’s CPI from 2004 to 2006 is _________.
The average change in CPI is __________.
The percentage change for the past two years is ___________.
The average percentage change
for the past two years is _________.
2

The Banana Republic’s CPI (consumer price index) at the end of year 2000 was 115.
At the
end of year 2003 the republic’s CPI was 106.
The change in Republic’s CPI from 2000 to 2003
is _________.
The average change in CPI is __________.
The percentage change for the past
two years is ___________.
The average percentage change for the past two years is _________.
3
The relationship between price and quantity for a product is given as Q = 100  2P, where Q
is quantity and P is price.
a.
Graph the equation in question 3.
b.
The variable Q in question 3 is called _________ variable.
The variable P is called
_________ variable.
The number 100 is called ___________.
And the number 2 is called
_________.
c.
The relationship between Q ans P is a(n) _____________ relation.
A $1 increase in P will
___________ Q by ______________ units.
4
The relationship between price and quantity for a product is given as Q = 10 + .5P, where Q
is quantity and P is price.
a.
Graph the equation in question 4.
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The variable Q in question 4 is called _________ variable.
The variable P is called
_________ variable.
The number 10 is called ___________.
And the number .5 is called
_________.
c.
The relationship between Q and P is a(n) _____________ relation.
A $1 increase in P will
___________ Q by ______________ units.
d.
Graph the equations in question 3 and question 4 on the same coordinate system.
e.
At the intersection of the two equations Q = _______ and P =__________
5.
The relationship between the income and consumption of the Banana Republic is given as
(numbers are in millions of Banana Republic’s currency):
Year
Income
Consumption
2000
1200
1150
2001
1450
1337.50
2002
1670
1502.50
2003
1820
1615
2004
1900
1675
2005
2100
1825
2006
2300
1975
answer the following questions using the information provided in the table.
a.
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 Spring '05
 AlSabea
 Economics, Macroeconomics, Comparative Advantage, japan, Production Possibilities Frontier

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