Midterm 2 Practice Answer 2011

Midterm 2 Practice Answer 2011 - Econ 352 Intermediate...

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Econ 352 YiLi Chien Intermediate Macroeconomics Spring 2011 2nd Midterm Practice Answers Part One 1. (8 pts) What is the definition of unemployment rate? List the cause of frictional unemployment and structural unemployment respectively. The definition of unemployment is the number of unemployment workers divided by the total labor force. The frictional unemployment is caused by the time to search for a job The structural unemployment is caused by wage rigidity which might result from minimum wage law, labor unions or efficiency wage. 2. (10 pts) Consider an economy that produces pizza, beer, and breweries. Pizza and beer are consumption goods demanded by college students, breweries are an investment good demanded by beer producers. Quantities and prices can be read off the following table. 2007 2008 Q 2007 P 2007 Q 2008 P 2008 Pizza 15 10 10 20 Beer 30 15 40 10 Breweries 1 100 1 100 For year 2008, compute the GDP deflator and CPI. For computation of real GDP and
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Midterm 2 Practice Answer 2011 - Econ 352 Intermediate...

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