Assignemnt
1. GDP
BEA National Data (See section 1: Domestic Product and Income; Table 1.1.1):
Real GDP, FRED:
Nations Seek Success Beyond GDP, Mark Whitehouse, Wall Street Journal, 1/10/11:
As a new economist, a policy maker asks your assistance with the following concerning real GDP:
a) Report the 3rd quarter percentage change in Real GDP.Did real GDP grow or shrink in the 3nd quarter of 2017 compared to the 2ndquarter? Also, report the percentage change in the consumption, investment, and government components of GDP.
b) Review the real GDP over time data from FRED. Since the year 2000, how would you characterize the performance of real GDP in the U.S.? Which years has real GDP increased and which years did real GDP decrease?
c) In the forecast from the Economist Intelligence Unit, what are the recent trends in GDP overall? Be sure to discuss the trends for GDP components (consumption, investment, government and net exports).
d) Are there any drawbacks to using real GDP to help with policy decisions? How accurately does it depict standard of living in a country (is there any relationship between real GDP and living standards)? Use the article from the Wall Street Journal to help in addition to our discussion in class to support your answer.
e) How could the real GDP statistic for the U.S. be useful to a small, regional business owner (for example, a restaurant in Manchester, NH)? Be sure to explain why.
2. Unemployment:
BLS: (See the "Employment Situation Summary Table A")
Why Doesn't the 4.9% Unemployment Rate Feel Great, Heather Long, CNN, 2/6/16:
Northern New England's Good Jobless Numbers? They're Bad, Jon Kamp and Jennifer Levitz, WSJ, April 21, 2017:
A U.S. policymaker asks for your help regarding unemployment
a) What is the labor force, labor force participation rate, and unemployment rate for October 2017 according to the BLS?
b) If the number of unemployed individuals in the U.S. increases to 9.5 million (9,500 in the format on the BLS site) and the number of employed decreases to 150.88 million (150,881 in the format on the BLS site), what would the new unemployment rate be? Assume labor force remains constant at 160.38 million (160,381 in the BLS site format).
c) Despite lower unemployment numbers across the U.S., why are some economists still concerned about the labor market? Use the CNN article to support your answer.
d) How is it possible that challenges remain in the labor market despite a relatively low unemployment rate in Northern New England? Use the Wall Street Journal article to support your answer.
3. Inflation
Consumer Price Index, Federal Reserve Bank of Minneapolis:
Food Price Deflation Cheers Consumers, Hurts Farmers, Grocers, and Restaurants, Heather Haddon and Julie Jargon, WSJ, 8/29/16.
A friend asks you to consider the following regarding their wage and inflation. You can use the CPI data in the link above for your calculations. Round to the nearest dollar. Be sure to show your work!
a) If your friend earned $55,000 in 2013, how much would she need to earn in 2017 in order to retain her purchasing power from 2013 given the above CPI information?
b) If your friend is offered and accepts a salary of $57,500 in 2017, would her purchasing power be higher, lower, or the same as her purchasing power in 2013 with her original salary of $55,000?
c) If your friend expects the CPI to be 270.0 in 2020, how much would she need to earn to keep her purchasing power constant from her $57,500 salary in 2017?
d) How can changes in the price level (inflation or deflation) impact different people in different ways? Consider the WSJ article on food prices in your answer.
e) Why do economists generally want to see stable, low inflation rather than high, variable inflation or deflation?