Macro ECONOMICS

1. Below is the date on Netherland’s GDP extracted from Eurostat, the European Union’s statistical office, for the period 2007 – 2019, Real GDP is calculated with a fixed Wight method and 2007 as the base year. Fill the table by calculating

% Change

Nominal GDP in Price

Real GDP GDP deflator Level

2005 2.297,82 2.297,82

2006 2.383,07 2.390,20

2007 2.460,99 2.510,11

2008 2.486,88 2.558,02

2009 2.346,67 2.456.66

2010 2.442,67 2.576,22

2011 2.530,36 2.699,10

2012 2.539,89 2.749,90

2013 2.542,58 2.809,48

2014 2.583,37 2.903,79

A- The GDP deflator for each year.

B - The change in price level, in percentage terms.

2. Define the following:

A. Sticky Prices:

B. Business Cycle:

C. GDP:

D. GNP:

E. Durable Goods:

F. The labor force:

G. The consumer price index:

H. The unemployment rate:

I. Producer price indexes:

J. Output growth:

1-4. Dana makes custom bird houses in her garage and she buys all her supplies from a local lumber yard. Last year she purchased $3.500 worth of supplies and produced 250 bird houses. She sold all 250 bird houses to local craft store for $25 each. The craft store sold all the bird houses to the customers for $55 each. For the total bird house production. Calculate the value added of Dana and the craft store?

5. porta Island is small nation with a simple economy that produces only six goods: Sugar cane, Yo – yos, Run, Peanuts, Harmonicas and Peanut butter. Assume that one quarter of all the sugar can is used to produce run and one half of all peanuts are to produce Peanut butter.

A – Use the production and price information in the table to calculate nominal GDP for 2019?

b- Use the production and price information in the table to calculate real GDP from 2017, 2018, and 2019 using 2019 as base year. What is the growth rate of real GDP from 2017 to 2018 and from 2018 to 2019?

C - Use the production and price information in the table to calculate GDP for 2017, 2018, and 2019 using 2018 as the base year. What is the growth rate of GDP from 2017 to 2018 and 2018 to 2019?

2017 2018 2019

Product Quantity Price Quantity Price Quantity Price

Sugar cane 240 $ 0.80 240 $ 1.00 300 $ 1.15

Yo – yos 600 $ 2.50 700 $ 3.00 750 4.00

Run 150 10.00 160 12.00 180 15.00

Peanuts 500 2.00 450 2.50 450 2.50

Harmonicas 75 25.00 45 30.00 85 30.00

Peanut butter 100 4.50 85 4.50 85 5.00

Example of calculating inflation using CPI

Price per Unit in

Units Purchased 2013 2014 2015 2016

Blueberries 8 $2.00 $2.00 $2.10 $2.40

Pineapples 5 $2.00 $2.50 $2.50 $3.00

Cheese 3 $2.50 $3.00 $3.50 $4.00

From the table above find the following:

A. The bundle price for the goods in period 2014 is?

B. Suppose 2014 is the base year. The price index in 2014 is?

C. If 2014 is the base year, the price index in 2013 is?

D. If 2014 is the base year, the price index in 2015 is?

E. If 2014 is the base year, the inflation rate between 2014 and 2015 is?

6 – Suppose the number of employed people in an economy is 321,545,372, the unemployment rate in this economy is 7.4 percent, or .074, and the labor force participation rate is 80 percent, or .80.

Require

A- What is the size of the labor force?

B – How many people are unemployed?

C- What is the size of the working – age population?

Refer to the information provided in the table below to answer the following

1) What is the value for this economy's nominal GDP in 2010 and 2015?

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2) Using 2010 as a base year, what is the growth rate in the real GDP?

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3) Using 2015 as a base year, what is the growth rate in the real GDP?

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4) Using the new procedure of the Bureau of Economic Analysis (BEA), what is the growth rate in the real GDP?

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5) If 2015 is the base year, what is the inflation rate in this economy?

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Refer to the information provided in the table below to fill the empty spaces.