Download Homework #2

Name:___________________
Class Time:____________________
HW # 2 (Total of 25 pts.)
“Principles of Macroeconomics”
NSCC - Summer 2007
Professor: Moonsu Han
Due June 5 (Tue), 2007
Question 1 Bring definitions for following terms and explain why we are calculating
those terms in Macroeconomics ONLY for Bold and Italic terms. (Total 5 pts., 1 pt.
each)
1. GDP (Definition only):
2. Real GDP (Definition and Why?):
3. GDP Deflator (Definition and Why?):
4. Business Cycle (Definition only):
5. Unemployment Rate (Definition only):
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Question 2 Suppose the information in the following table is for a simple economy that
produces only the following four goods and services: textbooks, hamburgers, shirts, and
cotton. Assume all of the cotton is used in the production of shirts. (Total 14 pts.)
Year
2005
2006
2007
P of Q of
P of
Q of
P of
Q of
P of
Q of
Text- Text- Hamburgers Hamburgers Shirts Shirts Cotton Cotton
book book
$50
90
$2.00
75
$30
50
$0.80 10,000
$60
100
$2.00
100
$25
50
$0.60
8,000
$65
100
$2.25
120
$25
65
$0.70 12,000
1. Compute nominal GDP, real GDP, and the GDP deflator for each year, using
2005 as the base year. (6 Pts.) Need to show detailed calculation.
2. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator
in 2006 and 2007 from the preceding year. (6 Pts.) Need to show detailed
calculation.
3. Did economic well-being rise more in 2006(=from 2005 to 2006) or 2007(from
2006 to 2007)? Explain. (2 Pts.)
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Question 3 (4 Pts.)
Suppose that there is a country called NSCC Republic. The Bureau of Labor Statistics of
NSCC Republic announced that in January 2007, of all working age adult populations,
10,000 were unemployed, 85,000 were employed, and 5,000 were not in the labor force.
How big was the labor force? (1 pt.) What was the labor-force participation rate? (1.5
pts.) What was the unemployment rate? (1.5 pt.) Need to show detailed calculations.
Question 4 Self-asking question. (2 pts.) Make your own question and answer it. (Should
be creative, interesting and logical within what we learned so far.)
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