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 5decimal 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 3decimal 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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