Problem Set 21.Reading: Economic Report of the President 2013,Chapter 2 "The Yearin Review and the Years Ahead"(pp. 41-89). The whole of Chapter 2is interesting and, therefore, recommended reading. For the purpose ofanswering the questions below, you may focus only on pp.41-43 and pp52-72. You will also need to use some of the Tables which can be found inAppendix B at the end of the document. You canfind the report onlineat http://www.gpoaccess.gov/eop/ or in the Course Documents Sectionon Blackboard. Answerbrieflythe following questions:(a) What was the growth rate of real GDPover the four quartersof2012?(b) What was the unemployment rate in December 2012? How does itcompare to the unemployment rate one year before that (Dec. 2011)?When was the latest peak in unemployment rates (i.e. the highestvalue in the last 5 years) and what was the unemployment rate atthat point?(c) Did employment increase or decrease in 2012? By how much (ap-proximately)? Was this mainly due to government jobs or privatesector jobs?(d) List theexpenditurecomponents of GDP discussed in pp 55-66. Foreach item, indicate whether it falls under???????or?. (Recalltheequationwesawinclass:?=?+?+?+?-?).(e) Did Exports and Imports rise or fall during 2012? Which of the twochanged by more (provide % changes)?(f) Which measure of prices (i.e. which index) does the Council of Eco-nomic Advisers use in their review to measure inflation? The re-port distinguishes between the "core" version of the measure and the"overall or headline version". What is the difference between thetwo? What was the inflation rate over 2012 according to each ofthese measures?You will need to look directly at the Tables in AppendixB of the report to answer the remaining questions(g) What was real GDP in each quarter? In which quarter was real GDPthe highest? (provide the numbers)(h) What was the real GDPgrowth ratein each quarter? In which quar-ter was the real GDPgrowth ratethe highest? (provide the numbers)(i) In 2012, was the (civilian) unemployment rate higher for males orfemales? For teenagers or older workers? For Whites, Asians, AfricanAmericans or Hispanics? (Provide numbers)(j) Looking at the Federal Government budget surpluses/deficits as a %of GDP from 2010 onwards, is the government running surpluses or1
deficits? What was the budget surplus/deficit as a % of GDP in eachof these years? Is it rising or falling? What about federal governmentdebt, is it rising or falling?2. Imagine an economy with only two businesses, called OrangeInc and Jui-ceInc. OrangeInc owns and operates orange groves. It sells some of itsoranges directly to the public, making $10,000. It sells the rest of its or-anges to JuiceInc, making $25,000. JuiceInc uses the oranges it acquires toproduce and sell orange juice to the public. The total revenue of JuiceIncis $40,000. What is the value added by each business? Compute GDPusing the Product Approach and using the Expenditure Approach.2