Review Exercises AND Solutions Macroeconomics DE 23- Tài liệu tham khảo | Đại học Hoa Sen

MACROECONOMICS
REVIEW EXERCISES AND SOLUTIONS 1) CHAPTER 23 PROBLEM 1
What components of GDP (if any) would each of the following transactions affect? Explain.
a. A family buys a new refrigerator.
b. Aunt Jane buys a new house.
c. Ford sells a Mustang from its inventory. d. You buy a pizza.
e. California repaves Highway 101.
f. Your parents buy a bottle of French wine.
g. Honda expands its factory in Marysville, Ohio. ANSWER a) consumption increases
- Increases because the refrigerator is a good purchased by a household. b) investment increases
- House is an investment good. c) Consumption increases
- Car is a good purchased by a household, but investment decreases because the car
in Ford’s inventory had been counted as an investment good until it was sold. d) Consumption increases
- Pizza is a good purchased by a household.
e) Government purchases increase
- The government spent money to provide a good to the public. f) Consumption increases
- Bottle is a good purchased by a household, but net exports decrease because the bottle was imported. g) Investment increases
- New structures and equipment were built. PROBLEM 6
Consider an economy that produces only chocolate bars. In year 1, the quantity produced
is 3 bars and the price is $4. In year 2, the quantity produced is 4 bars and the price is $5.
In year 3, the quantity produced is 5 bars and the price is $6. Year 1 is the base year.
a. What is nominal GDP for each of these three years?
b. What is real GDP for each of these years?
c. What is the GDP deflator for each of these years?
d. What is the percentage growth rate of real GDP from year 2 to year 3? 1/10
e. What is the inflation rate as measured by the GDP deflator from year 2 to year 3? ANSWER a)
Nominal GDP, year 1: 12 dollars
Nominal GDP, year 2: 20 dollars
Nominal GDP, year 3: 30 dollars b) Real GDP, year 1: 12 dollars Real GDP, year 2: 16 dollars Real GDP, year 3: 20 dollars c) Year 1 GDP deflator: 100 Year 2 GDP deflator: 125 Year 3 GDP deflator: 150 d) 25% growth e) 20% inflation rate Work Step by Step a) GDP = bars * price = revenue Year 1: Nominal GDP = 3∗4=12 Year 2: Nominal GDP = 4∗5=20 Year 3: Nominal GDP = 5∗6=30 b) Year 1:
Real GDP = 4 dollars *3 bars = 12 dollars Year 2:
Real GDP = 4 dollars * 4 bars = 16 dollars Year 3:
Real GDP = 4 dollars * 5 bars = 20 dollars 2/10 c)
GDP deflator = (Nominal GDP/Real GDP)x100 Year 1:
GDP deflator = 12/12∗100 = 1∗100 = 100 Year 2:
GDP deflator = 20/16∗100 = 1.25∗100 = 125 Year 3:
GDP deflator = 30/20∗100 = 1.5∗100 = 150 d)
GDP growth = (year 3 real GDP-year 2 real GDP)/year 2 real GDP growth = (20−16)/16 growth = 4/16 growth = 25% e) inflation (i)
= (GDP deflator in year 3 - GDP deflator in year 2)*100%/GDP deflator in year 2 i = (150−125)∗100%/125 i = 25∗100%/125 i = 20% 2) CHAPTER 24 PROBLEM 2
The residents of Vegopia spend all of their income on cauliflower, broccoli, and carrots. In
2016, they spend a total of $200 for 100 heads of cauliflower, $75 for 50 bunches of
broccoli, and $50 for 500 carrots. In 2017, they spend a total of $225 for 75 heads of
cauliflower, $120 for 80 bunches of broccoli, and $100 for 500 carrots.
a. Calculate the price of one unit of each vegetable in each year.
b. Using 2016 as the base year, calculate the CPI for each year.
c. What is the inflation rate in 2017? 3/10 ANSWER a) 2016:
2 dollars per cauliflower head
1.5 dollars per broccoli bunch 0.10 dollars per carrot 2017:
3 dollars per cauliflower head
1.5 dollars per broccoli bunch 0.20 dollars per carrot b) 2016 CPI: 100 2017 CPI: 146 c) 46% Work Step by Step a) 2016:
200 dollars for 100 cauliflower heads
75 dollars for 50 broccoli bunches 50 dollars for 500 carrots
200/100 = 2 dollars per cauliflower head
75/50 = 1.5 dollars per broccoli bunch
50/500 = 0.10 dollars per carrot 2017:
225 dollars for 75 cauliflower heads
120 dollars for 80 broccoli bunches 100 dollars for 500 carrots
225/75 = 3 dollars per cauliflower head
120/80 = 1.5 dollars per broccoli bunch
100/500 = 0.20 dollars per carrot b) Consumer price index 4/10
= (Price of basket of goods and services in current year /Price of basket in base year) x 100 2016 basket = 200+75+50 = 325
2016 CPI = (325/325) x 100 = 100
2017 basket of goods = 100∗3+50∗1.5+500∗0.2 = 475
2017 CPI = 475/325∗100 = 146 c)
Inflation rate = (2017 CPI - 2016 CPI)/2016 CPI i = (146−100)/100 i = 46% 3) CHAPTER 28 PROBLEM 1,
The Bureau of Labor Statistics announced that in January 2013, of all adult Americans,
143,322,000 were employed, 12,332,000 were unemployed, and 89,008,000 were not in
the labor force. Use this information to calculate: a. the adult population b. the labor force
c. the labor-force participation rate d. the unemployment rate ANSWER a) 244,662,000 b) 155,654,000 c) 63.62% d) 7.92% Work Step by Step 143,322,000 employed 12,332,000 unemployed 89,008,000 not in labor force
We want the population, labor force, labor force participation rate, and the unemployment rate.
Adult population = employed + unemployed + not in labor force
A=143,322,000+12,332,000+89,008,000 A=244,662,000 5/10
Labor force = employed + unemployed L=143,322,000+12,332,000 L=155,654,000
Labor force participation rate = labor force / population *100%
F=155,654,000/244,662,000∗100% F=63.62%
Unemployment rate = unemployed / labor force * 100%
UE=12,332,000/155,654,000∗100% UE=7.92% 4) CHAPTER 33 QUESTIONS FOR REVIEW
2. Draw a diagram with aggregate demand, short-run aggregate supply, and long-run
aggregate supply. Be careful to label the axes correctly. ANSWER
6. What might shift the aggregate-demand curve to the left? Use the model of aggregate
demand and aggregate supply to trace through the short-run and long-run effects of such a
shift on output and the price level. 6/10 ANSWER
The aggregate demand curve can shift to the left when there is a reduction in consumption
spending (keep in mind this does not include rise in price level) factors such as: increased
savings, less investment spending, less government spending, and reduction in net exports
can shift the aggregate supply.
7. What might shift the aggregate-supply curve to the left? Use the model of aggregate
demand and aggregate supply to trace through the short-run and long-run effects of such a
shift on output and the price level. ANSWER
The aggregate supply might shift to the left because a decline in economy's capital stock
or supply of labor, or even productivity. These factors shift the long run and short run
aggregate supply curves to the left. An increase in price levels shifts the short-run aggregate supply curve downward (left).
8. Explain whether each of the following events shifts
the short-run aggregate-supply curve, the aggregate demand curve, both, or neither. For
each event that does shift a curve, draw a diagram to illustrate the effect on the economy.
a. Households decide to save a larger share of their income.
b. Florida orange groves suffer a prolonged period of below-freezing temperatures.
c. Increased job opportunities overseas cause many people to leave the country. ANSWER
Please see the graphs for each of the three questions. 7/10 Work Step by Step
a) Households saving a larger portion of their income shifts aggregate demand curve to the left, decreasing the equilibrium price and quantity.
b) The more intense frost shifts the short run aggregate supply curve to the left,
increasing the equilibrium price and decreasing the equilibrium quantity.
c) In this case the quantity of labor force in the country decreases which causes an
increase in nominal wage. Thus, short-run aggregate supply declines and short-run
aggregate supply curve shifts to the left causing price level to rise and output to decrease. 5) CHAPTER 34 PROBLEM 1, PAGE 760
Explain how each of the following developments would affect the supply of money, the
demand for money, and the interest rate. Illustrate your answers with diagrams.
a. The Fed’s bond traders buy bonds in open-market operations.
b. An increase in credit-card availability reduces the amount of cash people want to hold.
c. The Federal Reserve reduces banks’ reserve requirements.
d. Households decide to hold more money to use for holiday shopping.
e. A wave of optimism boosts business investment and expands aggregate demand. ANSWER
The Influence of Monetary and Fiscal Policy on Aggregate Demand 8/10
a) The action of buying bonds increases the money supply. The money supply
shifts to the right. The money demand curve doesn't move, so the interest rate decreases.
b) The decrease in the cash people hold decreases the money demand (and lowers
the demand curve. The money supply curve stays constant, so the interest rate decreases.
c) The decreased reserve requirements increase the amount of funds the lending
institutions can lend. This increases the money supply curve (and shifts the 9/10
supply curve to the right). The demand curve for money stays the same, so the interest rate decreases.
d) The decreased money for current shopping increases the demand for money.
The supply of money stays the same, so the interest rate increases.
e) The increased demand increases the demand for money. The supply curve
doesn't move, so the interest rate increases. End 10/10