ps1ans - ECON 305: INTERMEDIATE MACROECONOMICS MARK MOORE...

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ECON 305: INTERMEDIATE MACROECONOMICS MARK MOORE SPRING 2011 PROBLEM SET 1: SOLUTIONS CHAPTER 2 Quick Check 1. a. True. b. True/Uncertain. Real GDP increased by a factor of 25; nominal GDP increased by a factor of 21. Real GDP per person increased by a factor of 4. c. False. d. True. e. False. The level of the CPI means nothing. The rate of change of the CPI is one measure of inflation. f. Uncertain. Which index is better depends on what we are trying to measure— inflation faced by consumers or by the economy as a whole. g. False. The underground economy is large, but by far the majority of the measured unemployed in Spain are not employed in the underground economy. 2. a. No change. This transaction is a purchase of intermediate goods. b. +$100: personal consumption expenditures c. +$200 million: gross private domestic fixed investment d. +$200 million: net exports e. No change. The jet was already counted when it was produced, i.e., presumably when Delta (or some other airline) bought it new as an investment. 3.
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ps1ans - ECON 305: INTERMEDIATE MACROECONOMICS MARK MOORE...

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