HW105_02 - Econ 105 Principles of Macroeconomics Homework...

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Econ 105: Principles of Macroeconomics
Homework Assignment 02
1. These are Canadian data for 2000 ‐ 2006:
Year CPI Average wage ($/hr)
2000 95.4 16.49
2001 97.8 16.78
2002 100 17.08
2003 102.8 17.20
2004 104.7 17.73
2005 107 18.12
2006 109.1 18.55
a) Calculate the percentage increase in CPI from 2000 to 2006.
b) Calculate the percentage increase in average wage from 2000 to 2006.
c) Calculate the real average wage for every year, 2000 to 2006.
d) Explain in 1 ‐ 2 sentences how the numbers in a) and b) reflect same development as the
numbers in c).
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2. Suppose the government decides to collect no more taxes on investments where such taxes
were collected before. All the other taxes and expenditures remain unchanged.
a) What is an effect of this decision (eliminating taxes on investments) on the supply of
loanable funds?