BU204_Section02_Unit3

1 Unit 3 Assignment Template: Long-Run Economic Growth Name: BU204 Section Number: 2 Date: 11.07.2023 Assignment This assignment addresses how economists measure various nations’ economies using measures such as Gross Domestic Product (GDP). In this assignment, you will explore how to measure cost-of-living changes and the rate of unemployment in the economy. This assignment assesses your knowledge on the following Course Outcome: BU204-2: Examine macroeconomic aggregate indicators, such as the GDP, inflation rate, unemployment rate, and their implications on the national economy. 1. Using the procedures described in the Unit 3 learning activity and listed in the World Bank Research Steps document, collect the data requested below from the World Bank for the year of 2000 and for the year of 2015 . a) Selecting Canada and China, download AND LIST the following data from the World Bank, in an Excel spreadsheet, for both the year ending 2000 and the year ending 2015: i) Industry (including construction), value added (% of GDP) ii) GDP (constant 2015 US$) iii) GDP per capita (constant 2015 US$) iv) Population, total v) Employment in agriculture (% of total employment) (modeled ILO estimate) vi) Employment in industry (% of total employment) (modeled ILO estimate) vii) Employment in services (% of total employment) (modeled ILO estimate) viii) Employment to population ratio, over 15 years of age total percentage. ix) Land area (sq. km) Count ry Name Count ry Code Series Name 2000 [YR2000] 2015 [YR2015] China CHN Employment in agriculture (% of total employment) (modeled ILO estimate) 50.01 28.59174 China CHN Employment in industry (% of total employment) (modeled ILO estimate) 22.49564 29.18079 China CHN Employment in services (% of total employment) (modeled ILO estimate) 27.49436 42.22746

2 China CHN Employment to population ratio, 15+, total (%) (modeled ILO estimate) 74.316 66.078 China CHN GDP per capita (current US$) 959.3604121 8016.446016 China CHN Industry (including construction), value added (current US$) $551,593,219, 713 $4,517,694,716, 355 China CHN Land area (sq. km) $9,388,220 $9,388,211 China CHN Population, total $1,262,645,00 0 $1,379,860,000 Canad a CAN Employment in agriculture (% of total employment) (modeled ILO estimate) 3 2 Canad a CAN Employment in industry (% of total employment) (modeled ILO estimate) 23 20 Canad a CAN Employment in services (% of total employment) (modeled ILO estimate) 74 78 Canad a CAN Employment to population ratio, 15+, total (%) (modeled ILO estimate) 61 61 Canad a CAN GDP per capita (current US$) $24,271 $43,596 Canad a CAN Industry (including construction), value added (current US$) $219,708,437, 142 $380,032,251,3 82 Canad a CAN Land area (sq. km) $8,965,590 $8,965,590 Canad a CAN Population, total $30,685,730 $35,702,908 b) For each country, calculate the percentage differences between the year 2000 and the year 2015 for each set of data. China CHN Employment in agriculture (% of total employment) (modeled ILO estimate) -43% China CHN Employment in industry (% of total employment) (modeled ILO estimate) 30% China CHN Employment in services (% of total employment) (modeled ILO estimate) 54% China CHN Employment to population ratio, 15+, total (%) (modeled ILO estimate) -11% China CHN GDP per capita (current US$) 736% China CHN Industry (including construction), value added (current US$) 719% China CHN Land area (sq. km) 0% China CHN Population, total 9% Canada CAN Employment in agriculture (% of total employment) (modeled ILO estimate) -35% Canada CAN Employment in industry (% of total employment) (modeled ILO estimate) -14% Canada CAN Employment in services (% of total employment) (modeled ILO 6%

4 this ratio can be attributed to China’s higher unemployment rate which is currently 16% higher than Canadas (n.d. Nationmaster), the biggest cause for this being that China has a surplus of workers. Looking at population as well, due to China’s large population vs Canadas, this would have an adverse impact on the values. Canada has a GDP of $43,596 to Chinas $8,016, this large difference has to do with China having a population that is 38 times greater. A lower GDP reflects a lower standard of living, where China currently is due to the issues, they are facing internally with such a large population. The disparities in these values between Canada and China highlight how long-term economic growth operates differently in these countries. Canada appears to be a nation that has a far better balance, as they have a higher focus on their service industry, lower unemployment rate, and a higher GDP. China on the other hand, has appears to be focusing more so on increasing the speed of their industrialization and manufacturing. China’s focus on these factors, has contributed to challenges with income inequality, sustainability, and a lower GDP which contributes to the lower standard of living for their population. These differences between the two nations are what have led to the differences in the values listed in the chart above. Canada has had a decent amount of growth as their GDP has nearly doubled in the span of 15 years, but China has seen an increase of 800% in the same amount of time. Although we currently see Canada as being more advanced than China, if China continues the path that it is currently on, then we will see their long-term economic growth match Canada’s and even exceed their values in the next 15 years.

5 3) Imagine a simple economy where people consume only two goods, food and clothing, as shown in the table below. Further, assume that the market basket of goods used to compute the CPI consists of 100 units of food and 20 units of clothing. Yearly Price per Unit Food Clothing 2004 price per unit $8 $20 2005 price per unit $12 $40 a. Compute the percentage changes in the price of food and the percentage change in the price of clothing between 2004 and 2005. Difference in food price: $12 - $8 = $4. Percentage change: $4/$8 = .5 * 100 = 50% Difference in clothing price: $40 - $20 = $20. Percentage change: $20/$20 = 1 * 100 = 100% b. Calculate the percentage change in the CPI between 2004 and 2005. 2004 Market Basket Price: 8 * 100 + 20 * 20 = 1200 2005 Market Basket Price: 12 * 100 + 40 * 20 =2000 CPI Percentage change: 2000 – 1200 / 1200 = .67 * 100 = 67% c. Do you think the CPI price changes affect all consumers in the economy to the same extent? If not, how do you determine who “wins” and who “loses” in this situation? Explain why these differences would exist. I don’t believe that the CPI price change affected all consumers in the economy to the same extent. Those that would be negatively affected, the ones that lose, would be those that are on a fixed income, those that haven’t received pay raises, or even lower- or middle-class families. The reason that these groups lose is because their money doesn’t gain value, it remains at the same value, but costs have increased so now they must get by with less. Those that would be positively affected, the winners would be those that have