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Macro problem set 1 - Problem Set 1 Macroeconomic Analysis...

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Problem Set 1 Macroeconomic Analysis & Applications – (ECON 209) Winter 2011 To be discussed in class on January 25 Aggregate Output, the Price Level, and International Trade Imagine a hypothetical country in which there are only three goods; two goods are produced within the country, the other is imported from abroad. One of the goods produced domestically is not consumed domestically - it is produced exclusively for export. The other domestically produced good is only consumed domestically. If this country were Canada, these three goods might be something like Textiles (produced and consumed domestically, but not exported) Co ff ee (not produced domestically, but consumed and thus imported) Mountie Posters (produced domestically, but only for export) The table below shows the prices and quantities for these three goods over various years. For Textiles and Mountie Posters, the quantities are the value added of annual production within the country. For Co ff ee, the quantity is the amount imported annually.
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