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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): 1 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.) 2 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.) 3