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MBAProblem1

MBAProblem1 - Macroeconomic Perspectives for Managers...

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Macroeconomic Perspectives for Managers Problem Set 1 Sherif Khalifa Due Tuesday, October, 4th, 2011 1. Consider an economy that produces and consumes cars and TVs. The following table contains the data for the prices and quantities in two di ff erent years, where the year 2000 is the base year: Year 2000 Year 2010 Good Quantity Price Quantity Price Cars 100 50,000 120 60,000 TVs 500,000 100 400,000 200 (a) Nominal GDP in 2000 = (b) Nominal GDP in 2010 = (c) Real GDP in 2000 = (d) Real GDP in 2010 = (e) GDP De fl ator in 2000 = (f) GDP De fl ator in 2010 = 1

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2. (a) Consider the following: Nominal GDP in 2009 =\$14 trillion. Real GDP in 2009 = \$11 trillion. GDP de fl ator = (b) Consider the following: GDP de fl ator in 2009=1.25. Nominal GDP in 2009 = \$15 trillion. Real GDP in 2009 = 3. (a) Consider the national income accounts identity: GDP =\$5465. Consumption =\$3657. Investment = \$741. Government purchases = \$1098. Net exports = (b) Consider the national income accounts identity: GDP =\$5465. Consumption =\$3657. Investment = \$741. Net exports = -\$1910. Government purchases = (c) Consider the national income accounts identity: GDP =\$5465. Consumption+Investment+Government purchases =\$5496. Exports = \$673. Imports = 2
4. Determine the impact of these transactions on GDP in 2009: (a) Toyota puts cars worth \$2 million in inventory: (b) IBM sells computers from its inventory worth \$1 million: (c) A miller sells fl our worth \$100,000 to Pizza Hut, which uses the fl our to prepare pizza worth \$200,000: (d) The sale of the year 2010 calender printed in 2009: (e) A man pays \$1000 in rent for a one bed room apartment every month: (f) The wages of police o cers and fi re fi ghters increased by 10%: (g) The sale of marijuana increased by 10%: (h) A chef cooks a pizza for his kids at home: (i) Increased hostility between unions and management sparks a rash of strikes. 5. Check the Bureau of Economic Analysis link in the course web page, and fi ll in the following table of annual real GDP in the U.S. and its components: 2006 2007 2008 2009 2010 Real GDP (Chained Dollars) Personal consumption expenditure

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