101-2011-PS2

101-2011-PS2 - Economics 101 Intermediate Macroeconomic...

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Economics 101 Marek Kapiˇ cka Intermediate Macroeconomic Theory Spring 2011 Problem Set 2 Due Wednesday April 20 in class Please write your name, perm number and your section on the top of your problem set. 1 Measuring GDP Consider the following economy. There are two firms and a government. First, there is a phone company that has a total revenue of $14000. The phone company pays $5000 in wages and spends $2000 on a car that is used for repair service. The phone company does not have any other costs. Second, there is a car factory which produces 15 cars. 12 cars are sold to consumers, one to the phone company and two cars are unsold at the end of the year. The price of each car is $2000. The car factory pays $4000 in wages and $1000 to the phone company for local and long distance service. Finally, there is the government. The government spends $1000 to pay one police officer in this economy and another $1000 are spent on government fellowships for bright college students.
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This note was uploaded on 12/26/2011 for the course ECON 101 taught by Professor Dumbass during the Fall '08 term at UCSB.

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101-2011-PS2 - Economics 101 Intermediate Macroeconomic...

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