1. The information below describes the real GDP per capita for the country of Utopia for the period of 1975 to 1991.
- If a new business cycle began in 1975, how long was this cycle?
- The peak occurred in which year? The trough occurred in which year?
- How long was the expansion? How long was the contraction?
- Calculate change in Real GDP per Capita (Complete the table below)
|
Year
|
Real GDP per Capita
|
Change in Real GDP per Capita
|
|
1975
|
6,000
|
|
|
1976
|
6,300
|
|
|
1977
|
6,700
|
|
|
1978
|
7,200
|
|
|
1979
|
7,850
|
|
|
1980
|
8,250
|
|
|
1981
|
8,450
|
|
|
1982
|
8,550
|
|
|
1983
|
8,575
|
|
|
1984
|
8,510
|
|
|
1985
|
8,370
|
|
|
1986
|
8,100
|
|
|
1987
|
7,950
|
|
|
1988
|
7,925
|
|
|
1989
|
7,960
|
|
|
1990
|
8,035
|
|
|
1991
|
8,155
|
|
2. What is the relationship between savings, capital formation, and consumption.
Savings will give a resource to investment. Investment will build up the capital formation and the capital formation will produce goods, which will be consumed by consumers.
3. GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.
4. Explain why the value of intermediate goods produced and sold during the year are not included separately as part of GDP, but intermediate goods produced and not sold are included separately as part of GDP.
5. Use the data below to find out the growth of income per person (over the entire period, not an annual basis) between the two years listed.
|
Year
|
Real GDP (1996 prices)
|
Population
|
|
2000
|
$4,915,600 million
|
233 million
|
|
2007
|
$9,243,800 million
|
283.5 million
|
6. The table below uses data for the year 2000 provide by Statistics Canada and adjusted to be comparable to U.S. data. All values are in millions. Fill in the blank entries in the table. Show your work!
|
Country
|
Adult
Population
|
Labor
Force
|
Employed
|
Unemployed
|
Unemployment
Rate
|
Labor-Force
Participation
Rate
|
|
Japan
|
108.12
|
|
63.79
|
3.20
|
|
|
|
France
|
|
25.98
|
|
2.45
|
|
56.4 %
|
|
Germany
|
69.17
|
39.75
|
|
|
8.08 %
|
|
7. Suppose you know that Canada's GDP in 1999 was $900 billion, and Canada's GDP in 1933 was $9 billion. What judgment about the change in the economic well-being of average Canadians could you make? Explain.
8. Suppose the following table records the total output and prices for an entire economy. Further, suppose that base year in the following table is 2001.
|
Year
|
Price of Apple
|
Quantity of Apple
|
Price of Haircut
|
Quantity of Haircut
|
|
2001
|
$5.00
|
40
|
$20.00
|
70
|
|
2002
|
$6.00
|
50
|
$22.00
|
60
|
|
|
|
|
|
|
- What was the value of nominal GDP in 2001 and 2002?
- What was the value of real GDP in 2001 and 2002?
- What was the value of the GDP deflator in 2001 and 2002?
- From 2001 to 2002, what was the economy's real economic growth?
- From 2001 to 2002, what was the inflation rate?
9. Nancy buys a house in 2000. He obtains a fixed 10% mortgage interest rate, and makes payments of $1,000 per month. The 2000 CPI is 90, the 2001 CPI is 90, the 2002 CPI is 100, the 2003 CPI is 110, and the 2004 CPI is 120. (20 marks)
1. What is the real mortgage interest rate in 2001, 2002, 2003 and 2004?
2. What are the values in 2000 dollars of Nancy's monthly mortgage payments in 2001, 2002, 2003, and 2004?
10. List and describe four determinants of productivity.
11. What is national saving? What is private saving? What is public saving? How are these three variables related?
12. According to the rule of 70, how long will it take for your income to double if you get a 5 percent raise every year? If you start work at the age of 23 earning $40,000 per year and get a 5 percent raise every year, how much will you be earning if you retire at 65?