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Handout 2

# Handout 2 - macroeconomic data where quantities are in...

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Econ 3140 Fall 2009 Handout #2 1. In the country of DR, people produce canoes, °sh for salmon, and grow corn. In one year they produced 5000 canoes using labor and natural materials only, but sold only 4000, as the economy entered a recession. The cost of producing each canoe was \$1000, but the ones that sold were priced at \$1250. They °shed \$30 million worth of salmon. They used \$3 million of the salmon as fertilizer for corn. They grew and ate \$55 million of corn. What was RD±s GDP for the year? 2. Suppose that private saving is \$1590 billion, investment is \$1945 billion, and the cur- rent account balance is -\$489 billion. From the uses-of-saving identity, how much is government saving? 3. The country of Old Jersey produces milk and butter, and it has published the following
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Unformatted text preview: macroeconomic data, where quantities are in gallons and prices are dollars per gallon. Between Year 1 and Year 2, nominal GDP grew by? Between Year 1 and Year 2, the percent change in real GDP (based on Year 1 as a base year) was? Between Year 1 and Year 2, the GDP de²ator (based on Year 1 as a base year) rose? 4. By Marks buys a one-year German government bond (called a bund) for \$400. He receives principal and interest totaling \$436 one year later. During the year the CPI rose from 150 to 162, but he had thought the CPI would be at 159 by the end of the year. By Marks had expected the real interest rate to be ________, but it actually turned out to be ________. 1...
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