exam1 - ECONOMICS 205: PRINCIPLES OF MACROECONOMICS SPRING...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECONOMICS 205: PRINCIPLES OF MACROECONOMICS SPRING 2005 MARK MOORE EXAM 1 I. Output and Price Measurement 1. (5 points) Suppose that the value of the stock market in the economy of Boomtown increases by $100 billion in year t. Is there any direct effect on GDP in year t? Explain. 2. (7 points) Define the GDP deflator. Explain in words how the consumer price index is calculated. Suppose we calculate inflation using the GDP deflator and using the CPI. Will the two inflation numbers be the same? Explain. 3. (5 points) Suppose output equals potential GDP. Will the unemployment rate be zero? Explain. II Growth (20 Points) Suppose there are two countries, A and B. The countries have labor forces of the same size, 100 workers, and the same level of training. There is no growth in population or the labor force in either country. This year, the countries also have the same level of output, 1000. The countries have had similar growth rates of real GDP for the past 5 years, and the economies have been growing at the same rate that potential GDP has been
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

exam1 - ECONOMICS 205: PRINCIPLES OF MACROECONOMICS SPRING...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online