classworkfeb16_solutions

classworkfeb16_solutions - Introduction to Macroeconomics...

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Introduction to Macroeconomics ECO 111 February 10, 2009 Class Assignment 1_____________________________________________________________ 1. Refer to the information provided in table below to answer the questions that follow: Table $ Billions Federal purchase of goods 1,000 Services 600 Imports 200 Change in business inventories 10 Durable goods 300 Nondurable goods 650 Exports 150 Residential investment 150 State and local purchases 350 Non-residential investment 750 a. The value of the gross domestic product in billions of dollars is GDP = C + I + G + (EX- IM) = 1550 + 910 + 1350 + (150 – 200) = $3760 b. Personal consumption expenditures in billions of dollars are C = Durables + Nondurables + services = 300 + 650 + 600 = $1550 c. The value of gross private domestic investment in billions of dollars are I = Residential investment + Non-residential investment + Change in business inventories = $910 d. The value of net exports Net exports = (Exports – Imports) = (150 – 200) = - $50 2. Suppose the base year in the following table is 2000. Year Production of X Price per unit of X 2000 20 units $5 2001 20 units $10 2002 20 units $20 a. What is the nominal GDP for 2000, 2001, 2002? NGDP 2000 = (20*5) = 100, NGDP 2001 = (20*10) = 200, NGDP 2002 = (20*20) = 400, b. What is the real GDP for 2000, 2001, 2002? RGDP 2000 =
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classworkfeb16_solutions - Introduction to Macroeconomics...

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