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Consider an economy that produces and consumes hot dogs and hamburgers. In the following table are data for two different years.
a. Using 2010 as the base year, compute the following statistics for each year: nominal GDP, real GDP, the implicit price deflator for GDP, and the CPI. b. By what percentage did prices rise between 2010 and 2018? Give the answer for each good and also for the two measures of the overall price level. Compute the answers given by the Laspeyres and Paasche price indexes. Explain the difference.
Abby consumes only apples. In year 1, red apples cost $1 each, green apples cost$2 each, and Abby buys 10 red apples. In year 2, red apples cost $2, green apples cost$1, and Abby buys 10 green apples. a. Compute the CPI for apples for each year. Assume that year 1 is the base year in which the consumer basket if fixed. How does your index change from year 1 to year 2? b. Compute Abby's nominal spending on apples in each year. How does it change from year 1 to year 2? c. Using year 1 as the base year, compute Abby's real spending on apples in each year. How does it change from year 1 to year 2? d. Defining the implicit price deflator as nominal spending dividend by real spending, compute the deflator for each year. How does the deflator change from year 1 to year 2? e. Suppose that Abby is equally happy eating red or green apples. How much the true cost of living increased for Abby? Compare this answer to your answer to part (a) and (d). What does this example tell you about Laspeyres and Paasche price indexes?
The population of Ectenia is 100 people: 40 work full-time, 20 work half-time but would prefer to work full-time, 10 are looking for a job, 10 would like to work but are so discouraged they have given up looking, 10 are not interested in working because they are full-time students, and 10 are retired. What is the number of unemployed? a. 10 b. 20 c. 30 d. 40
An economy has 100 people divided among the following groups: 25 have full-time jobs, 20 have one part-job, 5 have two part-time jobs, 10 would like to work and are looking for jobs, 10 would like to work but are so discouraged the have given up looking, 10 are running their own businesses, 10 are retired, and 10 are small children. a. Calculate the labor force and the labor-force participation rate. b. Calculate the number of unemployed and the unemployment rate. c. Calculate total employment in two ways: as measured by the household survey and as measured by the establishment survey.
In this problem, we will determine the indicators related to employment.
There are people in an economy.
have full time jobs, have one part-time job, have two part-time jobs, are looking for jobs, have given up looking, are running their own businesses, are retired, and are small children.
a) First we need to calculate the labor force.
The labor force are the employed and the unemployed.
Then we need to calculate the labor-force participation rate.
b) The number of unemployed is .
The unemployment rate is
c) Measured by household surveys
Number of employed business owners
Measured by establishment surveys
The people who have part-time jobs appear in two surveys.
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Consider whether each of the following events is likely to increase or decrease real GDP. In each case, do you think the well-being of the average person in society most likely changes in the same direction as real GDP? Why or why not? a. A hurricane in Florida forces Disney World to shut down for a month. b. The discovery of a new, easy-to-grow strain of wheat increases farm harvests. c. Increased hostility between unions and management sparks a rash of strikes. d. Firms throughout the economy experience falling demand, causing them to lay of workers. e. Congress passes new environmental laws that prohibit firms from using production methods that emit large quantities of pollution. f. More high school students drop out of school to take jobs mowing lawns. g. Fathers around the country reduce their workweeks to spend more time with their children.