QUESTION 1 -

The gross domestic product (GDP) is the most watched of all economic indicators contained in Canada's national accounts. Visit the Statistics Canada website www.statcan.gc.ca. Locate in Canada's Economic Accounts the summary tables for the economic series mentioned in parts

(a) and (b) below; and then answer parts (c), (d), and (e).

a) Gross domestic product Expenditure Based and income based (Separately), at market prices for the years 2009 through 2013. Print the data table and attach at the end of your answers to this question.

b) Real Gross Domestic Product, expenditure-based, annual, at 2007 chained (constant) prices, for the years 2009 through 2013. Print the data table and attach at the end of your answers to this question.

c) What trend do you observe in GDP at market prices? What trend do you observe in GDP at constant prices? How and why do the two series differ?

d) Can you explain the trend in consumption expenditure and in Government Expenditure during the period of 2009 through 2013. Calculate the GDP Deflator for each year; show and explain your calculations.

e) For the year 2013, calculate the values of each of the four components of GDP at market prices: consumption (C), investment (I), government purchases (G), and net exports (NX). Show and explain all your calculations.

QUESTION 2

The consumer price index (CPI) is an economic indicator that is a closely watched by many stakeholders in the economy. Visit the Statistics Canada website (www.statcan.gc.ca) find data on the Consumer Price Index and its major components for year 2009 through 2013.

a) Print the data table and attach at the end of your answer to this question.

b) Calculate the annual inflation rate for each of the eight separate items for year 2013 using the formula you have learnt in the class (show and explain all your calculations). What item showed the highest rate of inflation? The lowest? Why?

c) Calculate the inflation rate for each of the special aggregates for 2013 (show and explain all your calculations). What aggregate showed the highest rate of inflation from 2012 to 2013? The lowest? Why?

d) Explain in detail the reasons for the trends in prices reported in parts (b) and (c). By how much the index has changed over the year? Also discuss whether those trends are consistent or not with your own experience as a consumer, taking care to provide as much detail as possible.

QUESTION 3

What is the opportunity cost of investing in physical capital? Do you think a country can overinvest in physical capital? What is the opportunity cost of investing in human capital? Do you think a country can over-invest in human capital? Explain your answer.