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# It is easier to read than below. real GDP is substantially higher today than it was 60 years ago.

1 U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?
2. In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing.
food
clothing
2002 price
\$4
\$10
2003 price
\$6
\$20
a. What are the percentage increases in the price of food and in the price of clothing?
b. What is the percentage increase in the CPI?
c. Do these price changes affect all consumers to the same extent? Explain.
3. The table below uses data for the year 2003 provided by the BLS and adjusted to be comparable to U.S. data. All values are in thousands. Fill in the blank entries in the table. Show your work!
Country

Population

Labor
Force

Employed

Unemployed

Unemployment
Rate
Labor-Force
Participation
Rate
Japan
109,474

62,510
3,500

France

26,870

2,577

57.41
Germany
70,159
39,591

9.69

4. Make a list of things that would shift the aggregate demand curve to the right.
5. Make a list of things that would shift the long-run aggregate supply curve to the right.

1 U.S. real GDP is substantially higher today than it was 60 years ago.
What does this tell us, and what does it not tell us, about the
well-being of U.S. residents?
2. In a simple economy, people consume only 2 goods, food and clothing.
The market basket of goods used to compute the CPI has 50 units of food
and 10 units of clothing.
food clothing
2002 price \$4 \$10
2003 price \$6 \$20
a. What are the percentage increases in the price of food and in
the price of clothing?
b. What is the percentage increase in the CPI?
c. Do these price changes affect all consumers to the same
extent? Explain.
3. The table below uses data for the year 2003 provided by the BLS and
adjusted to be comparable to U.S. data. All values are in thousands.
Fill in the blank entries in the table. Show your work!
Country
Population
Labor
Force
Employed
Unemployed
Unemployment
Rate Labor-Force
Participation
Rate
Japan 109,474 62,510 3,500
France 26,870 2,577 57.41
Germany 70,159 39,591 9.69
4. Make a list of things that would shift the aggregate demand curve to
the right.
5. Make a list of things that would shift the long-run aggregate supply
curve to the right.

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