econ303-hw1-spring13 - Econ303 Homework Assignment 1 Spring...

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Econ303 Homework Assignment 1 Spring 2013 Due Tuesday February 5 Name: Section: 1.Place each of the following transactions in one of the four components of expenditure: consumption, investment,, government purchases, and net exports. a.Boeing sells an airplane to the Air Force. b.Boeing sells an airplane to American Airlines. c.Boeing sells an airplane to Air France. d.Boeing sells an airplane to Amelia Earhart.
2.Consider an economy that produces and consumes bread and automobiles. In the following tables are data for two different years 2000 2010 Good Quantity Price Quantity Price Automobiles 100 $50,000 120 $60,000 Bread 500,000 $10 400,000 a.Using 2000 as the base year, compute the following statistics for each year: nominal GDP, the implicit price deflator for GDP, and a fixed-weight price index such as the CPI. b.How much did prices rise between 2000 and 2010? Compute the answers given by the Laspeyres and Paasche price indexes. Explain the difference. $20

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