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# MT1P1 vA - ECO 320L Fall 2010 Professor Beatrix Paal...

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ECO 320L Fall 2010 Professor Beatrix Paal Midterm 1 -- Problems name: 9/27/2010 65 points + 8 extra credit points 1. (_____ of 13 points) In the third quarter of 2008 nominal consumption expenditures, reported at an annualized rate, were 10,202.0. In the next quarter, nominal consumption changed to 9,967.2 . During these same two quarters, the price level was 110.367 and 108.736 , as measured by the PCE price index, using base year of 1995. (Note: The numbers in this problem are somewhat difficult to work with, because the precision you use really matters. This is intentional. Economists often face this difficulty. Follow my instructions precisely) a. (_____ of 3 points) Calculate consumption in 2008Q3 and 2008Q4 in terms of 1995 dollars. (Round your answers to one decimal.) SHOW YOUR WORK. b. (_____ of 5 points) Calculate the quarterly growth factor (use a 5-decimal precision) and growth rate of consumption from the third quarter of 2008 to the next quarter. Express the growth rate as a percent. (Use a 3-decimal precision.) SHOW YOUR WORK. c. (_____ of 5 points) Express the growth factor and growth rate you calculated in part b) in an annualized form. (Keep the same precision as in part b).) SHOW YOUR WORK.

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MT1P1 vA - ECO 320L Fall 2010 Professor Beatrix Paal...

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