Third Homework Assignment
ECON 272
Due at the beginning of class on Thursday, February 5
26 pts.
Directions: Copy this page into a word document and type your answers. Use at least 10 pt. font. Leave the questions on your answer sheet.
NOTE: NEVER COPY AND PASTE FROM THE NOTES OR FROM THE INTERNET WHEN ANSWERING A QUESTION - THIS COULD RESULT IN ZERO POINTS!! ALSO - BE SURE TO ANSWER THE QUESTION THAT IS ASKED - DON'T SIMPLY TALK AROUND THE SUBJECT AT HAND!
Read the WSJ article, "U.S. Economy Hits Speed Bumps" to answer the following questions. Here is the link
1. Explain why the following sentences in the article would mean that GDP would be lower: "Imports rose briskly as Americans bought foreign goods that were effectively made cheaper by the strengthening dollar. And the slumping world economy tamped down demand for U.S. exports." (4 pts.)
2. Here is another sentence from the article: "Some retailers say the benefits of lower gasoline prices—which have fallen more than 50% since June—have yet to fully surface." Explain why lower gasoline prices would not mean a higher GDP. Provide an example in your answer, "Even though Bob is paying a lower price for gasoline, ....." (4 pts.)
| Total Population: | 700 million |
| Under Age 16 or in the Military or in an Institution: | 250 million |
| Employed: | 190 million |
| Unemployed: | 40 million |
| Not in the Labor Force: | 220 million |
3. Given the data in the table above, what is the unemployment rate? (Show all work - no work, no points) (2 pts.)
Answer:
For all multiple choice questions - you must type your answer or it will not count. For example, at the end of the question, type: answer: a or b or c, etc. Again, all answers not typed in your homework will not count. Write a one sentence explanation for your answer. (2 pts. each)
4. Real GDP
a. will always change when prices change.
b. is also called nominal GDP.
c. measures GDP minus depreciation of capital.
d. is nominal GDP adjusted for changes in prices
e. none of the above is correct
Answer:
5. General Motors Corporation (a U.S.-based firm) produces a Saab vehicle in Sweden, and sells it in the United States. In which country’s GDP is it included?
a. Sweden and the United States
b. The United States because it was sold there
c. The United States because GM is a U.S. company
d. Sweden because it was produced there
e. Neither country includes it in GDP
Answer:
6. Which of the following is included in GDP?
a. the value of illegally produced goods
b. the value of housework by a stay-at-home dad
c. the value of volunteer work done at a local homeless shelter
d. the cost of a computer bought by the head of the Federal Bureau of Investigation
e. More than one answer could be correct.
Answer:
7. Which of the following could be a potential problem with the measurement of GDP?
a. The U.S. government spends money on a monument to Bob the Bully.
b. Betty bakes a cake in her home instead of buying it from a store.
c. Bill's lumber purchase is not counted in GDP because he is going to use it to build a doll house for his daughter, Brenda.
d. Blyth buys a fancy scarf from a seamstress in Paris, France and it is not counted in U.S. GDP.
e. More than one answer could be correct.
Answer:
8. The government gave Bob (a U.S. citizen) $500 worth of U.S. government food stamps. Since government spending is part of GDP, this transaction is included in U.S. GDP.
a. True
b. False
Answer:
9. Total nominal GDP = $100,000 in the year 2013 in Small Town, U.S.A. (which only produces boxes of paper). Total nominal GDP = $120,000 in the year 2014 in Small Town, U.S.A.. In both years total actual productivity (or sales of productivity) in the town was = 20,000 boxes of paper. Therefore, the difference in the nominal GDP was likely due to:
a. the price of the boxes of paper decreasing - therefore real GDP would be $120,000 in both years
b. the price of the boxes of paper increasing - therefore real GDP would be $120,000 in both years
c. the price of the boxes of paper decreasing - therefore real GDP would be $100,000 in both years
d. the price of the boxes of paper increasing - therefore real GDP would be $100,000 in both years
e. none of the above makes any sense with respect to the situation
Answer
10. The U-6 unemployment rate:
a. is always lower than the official unemployment rate
b. adds in discouraged workers and underemployed workers to the unemployed calculation
c. adds in teenagers to the unemployed calculation
d. adds in discouraged workers and part-time workers to the unemployed calculation
e. none of the above
Answer
11. Frictional unemployment exists because of:
a. skills that people have not matching the jobs available
b. a bad economy caused by global warming
c. underemployed people
d. information problems
e. more than one answer is correct
Answer