Discussion #2 - 1 Refer to the above data GDP is A $390 B...

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1. Refer to the above data. GDP is: A. $390. B. $417. C. $422. D. $492. GDP = (C) Personal Consumption Expenditures + (I g ) Gross Private Domestic Investment + (G) Government Purchases + (X n ) Net Exports. C, I g, and G are all given in the data. X n is US exports – US imports. So far, we have C = 250 I g, = 75 G = 90 X n = 2 (24-22) Added together, we get 417. ------------ 2. Refer to the above data. NDP is: A. $370. B. $402. C. $392. D. $467. NDP = GDP – Consumption of Fixed Capital We already have GDP (417), so this is simple subtraction. Look at the data to find Consumption of Fixed Capital, which is 25 and subtract it from 417 to get 392. ------------ 3. Refer to the above data. NI is: A. $362. B. $372. C. $447. D. $402. NI = NDP – Statistical Discrepancy + Net Foreign Factor Income We have NDP (392). Subtract Statistical Discrepancy (0) and we still have 392. Add Net Foreign Factor Income (10) and get 402. ------------ 4. Refer to the above data. PI is: A. $314. B. $346. C. $408. D. $437. PI = NI – Taxes on Production and Imports – Social Security Contributions – Corporate Income Taxes – Undistributed Corporate Profits + Transfer Payments We have NI (402). Refer to the data for the numbers: 402 – 20 – 15 – 40 – 35 = 292 + 22 = 314. ------------ 5. Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is:
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A. 3 percent. B. 6 percent. C. 7 percent. D. 53 percent. Unemployment rate = unemployed divided by labor force multiplied by 100. Here, the unemployed is found by taking the civilian labor force (50 million) and subtracting 47 million, which gives us 3 million. (We are not using the 100 million number because the total population includes adults who are potential workers but are not employed and they are not looking for work.) 3 million divided by 50 million = .06 Multiply .06 by 100 = 6 percent ------------ 6. Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percent of potential GDP is:
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This note was uploaded on 02/10/2010 for the course ECON 201 taught by Professor Smith during the Spring '10 term at Bowling Green.

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Discussion #2 - 1 Refer to the above data GDP is A $390 B...

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