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- Suppose that over the last three years, there has been a 10% increase in real GDP, but a 5% increase in nominal GDP, we might conclude thata) The economy has entered a recession.b) The price level has increased, with 5% inflation.c) The price level has decreased, with 5% deflation.d) The economy has experienced a combination of low growth and inflation.1.21 If real GDP falls from one period to another and the price level stays the same, we can conclude that…a) Nominal GDP increasedb) Inflation decreasedc) Nominal GDP also decreasedd) NDP increased1) The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP = 10; autonomous consumption=1, Investment = 2; Government = 2; Net Exports = 0 and T=2. Assume MPC = 0.75. There is a sudden shock to so called business confidence leading to decrease in investment by 1. Find the change in the equilibrium level of income. 2) Inflation in Macroland is 5% this year and it is expected to remain at this rate for a foreseeable future. If true then CPI will double in around 14 years. CPI will double in around 20 years. CPI will double in around 25 years. CPI will double in around 10 years.
- An American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. In which quarter(s) does(do) the value of the shoes add to U.S. GDP? O the third but not the second quarter O the second quarter but not the third quarter O the second and third quarters O neither the second nor the third quarter Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.China’s real GDP increased 6.9 percent in the first quarter of 2017 from a year earlier.Investment grew by 9.2 percent and retail sales by 10.9 percent. In current prices, GDPincreased by 11.8 percent from a year earlier.1. Explain how China’s real GDP can grow at a 6.9 percent rate when consumption andinvestment grew faster than 6.9 percent. 2. Explain why the growth rate of GDP in current prices does not provide informationabout how quickly the economy is really growing.Suppose the Federal Reserve begins to Increase the supply of money at an Increasing rate. What Impact would that have on GDP, unemployment, and inflation?
- Suppose an economy has two years worth of data, years 1 and 2. Sup- pose there are also two goods, bread and corn. Suppose in year one fifty units of corn are sold at a price of 1 $ and 20 units of bread are sold at a price of 2 $. Suppose in year two, 60 units of corn are sold at a price of 1.5 $ and 80 units of bread are sold at a price of 2.05 $. Compute nominal GDP in both periods. Compute real GDP under both definitions of a base year. Compute also a chain weighted real GDP series. For all three measures, compute the GDP deflator. In addition, compute a CPI’s for each base year assuming total consump- tion in the base year forms the basket of goods for measurement. What are the implications for these measures for the amount of inflation in this economy. [Note, you should have five candidate measures]. What about the amount of economic growth? Suppose that corn in year 2 is twice as valuable as corn in year 1 to consumers in terms of their enjoyment from its consumption (or in…Suppose that Glitter Gulch, a gold mining firm, increased its sales revenues on newly mined gold from $120 million to $240 million between one year and the next. a. Assuming that the price of gold increased by 100 percent over the same period, by what percentage did Glitter Gulch’s real output change? _______ percent b. If the price of gold had not changed, what would have been the change in value of Glitter Gulch’s real output? $________ millionA period when the economy shrinks is known as OA) a recession. O B) a contraction. O C) a slump. OD) all of the above.
- So far, we have learned to measure real GDP, but how do we end up with that real GDP? Of all of the different amountsof national income and price levels that might exist, how do we gravitate toward the one that gets measured each year asreal GDP?In short, it is the interaction of the buyers and producers of all output that determines both the national income (real GDP)and the price level. In other words, the intersection of aggregate demand (AD) and short-run aggregate supply (SRAS)determines the short-run equilibrium output and price level.Once we have a short-run equilibrium output, we can then compare it to the full employment output to figure out where inthe business cycle we are. If current real GDP is less than full employment output, an economy is in a recession. If currentreal GDP is higher than full employment output, an economy is experiencing a boom. If the current output is equal to thefull-employment output, then we say that the economy is in long-run equilibrium. The…9. Answer the following macroeconomics questions.i. What is the difference between nominal GDP and real GDP? Which one of them is used tocalculate the economic growth rate? Justify your answer.ii. Give the equation used to calculate the unemployment rate. State the different types ofunemployment. In your opinion, which type is the most problematic one? Justify your answer.iii. Governments may achieve certain economic goals; say controlling inflation or boostingeconomic growth, by implementing fiscal and/or monetary policies. Briefly explain thedifference between fiscal and monetary policiesExplain the expenditure measure of GDP. What is the underlying assumption of this measure? Provide one example where the underlying assumption is violated. Explain the income measure of GDP. What is the underlying assumption of this measure? Provide one example where the underlying assumption is violated. Explain why we need to compute nominal GDP, real GDP, and per capita GDP. Why does every economy have a natural rate of unemployment (NRU)? Can the actual unemployment rate measured by Statistics Canada be greater or lesser than the NRU? If so why? Assume that the economy has a recessionary gap. Explain how the economy will remove this gap without government intervention. Use graphs to illustrate your answer. Assume that the economy has an inflationary gap. Explain how the economy will remove this gap without government intervention. Use graphs to illustrate your answer.
