ECO
ECO 2013 Prob Sets.doc

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To receive credit must attach to your problem set Table 1.1.1 From Table 1.1.1 list the U.S. GDP quarterly growth rates (annualized) for the last five quarters. Is the growth rate “above” or “below” Year Quarter Growth rate the long-run U.S. annual growth rate? a. ________ ________ ________ % __________ b. ________ ________ ________ % __________ c. ________ ________ ________ % __________ d. ________ ________ ________ % __________ e. ________ ________ ________ % __________ 2. Unemployment Go to the Bureau of Labor Statistics web site, . On the homepage under Latest Numbers, click Unemployment Rate, then locate Table A-15, Alternative Measures of Labor Underutilization To receive credit must attach to your problem set Table A-15 For the latest month available find the official unemployment rate (seasonally adjusted) and the U-6 measure of labor underutilization (seasonally adjusted) Month and year Rate a. ____________ ________ % Official unemployment rate b. ____________ ________ % U-6 measure of labor underutilization

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-2- Ch9 3. Consumer Price Index (CPI) and salaries of baseball players since 1931 Go to the Federal Reserve Bank of Minneapolis web site, . On the home page you will see a box titled “What is a dollar worth?” Click “CPI Calculator Information,” then “Consumer Price Index and Inflation Rates, 1913 – “ [middle column contains the CPI] a. The CPI in 1931 : __________. The CPI in 2014: __________. b. Using your answers to (a), the rate of inflation between 1931 and 2014 was _________% Must show formula and detailed calculation c. Babe Ruth’s salary in 1931 was \$80,000 (President Hoover earned \$75,000). Using the “What is a dollar worth” box, Babe Ruth’s 1931 salary, adjusted for inflation , is equivalent to a salary in 2014 of \$_________________________. For (c) must print / attach to your problem set the filled in “What is a dollar worth?” box d. Zack Greinke (Los Angeles Dodgers), the highest paid baseball player in 2014, earned a salary of \$26,000,000. Between 1931 and 2014, salaries of baseball superstars have increased _______________ ___than the rate of inflation. Using your knowledge of markets, in 25 words or more explain why. Word Count: __________
-3- Ch9 4. Consumer Price Index (CPI) and home prices in Southwest Florida between 1994 and 2006 Go to the Federal Reserve Bank of Minneapolis website, . On the home page you will see a box titled “What is a dollar worth?” Click “CPI Calculator Information,” then “Consumer Price Index and Inflation Rates, 1913 - “ [middle column contains the CPI] a. The CPI in 1994: __________. The CPI in 2006: __________. b. The rate of inflation between 1994 and 2006 was __________% Must show formula and detailed calculation c. In 1994 a house located in San Carlos Park (Fort Myers) cost \$97,500. [CBS built in 1990, 3 bedroom-2 bath-2 car garage, 1472 / 2172 square feet.] Using the “What is a dollar worth” box, if this home had increased in value equal to the rate of inflation , then its price in 2006 would have been \$____________________. For (c) must print / attach to your problem set the filled in “What is a dollar worth?” box d. In 2006 this home sold for \$275,000. Between 1994 and 2006 this home increased in market value by __________%. \$☺\$ Must show formula and detailed calculation e. Between 1994 and 2006, Fort Myers home prices have increased ____________________than the rate of inflation. Using your knowledge of markets, in 25 words or more explain why.

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