Economics

Dr. Talat ULUSSEVER Homework 1 Principles of Macroeconomics

Dept. of Economics & Finance Fall 2020 (Econ 102)

Homework 1

Due: 19 November, 2020

1. (35 Points) Table 1

Good	Quantity	2017 prices	2018 prices	2019 prices
A	10	1.750 KD	2.000 KD	1.750 KD
B	20	2.000 KD	2.000 KD	2.000 KD
Z	10	3.000 KD	3.500 KD	4.000 KD

a. Calculate the cost of a bundle with 10 units of good A, 20 units of good B, and 10 units of good Z for 2017, 2018, and 2019 using the prices shown in the table 1.

b. Then convert the results into an index for each year using 2017 as the base year. (Calculate total spending and price index for 2017, 2018 and 2019.)

c. Calculate the percentage rate of change of the price level from 2018 to 2019 and from 2017 to 2018.

d. Now suppose that the base year is 2019. Recalculate the price index for 2017, 2018, and 2019.

e. Using the index with the 2019 base year, calculate the percentage rate of change of the price level from 2018 to 2019 and from 2017 to 2018.

2. (25 Points)

Refer to the information provided in Table 2 below to answer the questions that follow.

Table 2

a. Assuming that this economy produces only two goods Good X and Good Y,

Calculate the value for this economy's nominal GDP in year 1, year 2, and year 3.

b. Assuming that year 1 is the base year,

Calculate the value for this economy's real GDP in year 2 and the values for this economy's GDP deflator in year 1 and year 2.

c. Assuming that year 2 is the base year,

Calculate the value for this economy's real GDP in year 3

3. (10 Points)

Table 3

Referring to Table 3, calculate the labor force , unemployment rate , employment rate , and labor-force participation rate.

4. (30 Points)

Refer to the information provided in table 4 below to answer the question(s) that follow.

Table 4

Referring to table 4, calculate

a. The values for GDP , GNP , and NNP .

b. The values for national income , personal income , and disposable personal income .

Bonus. (5 Points) Go to the website for the Kuwait Central Statistical Bureau for data on current and constant Kuwait GDP by expenditure category for 2019 to complete the table below. See the accompanying KCSB page.

Expenditure Category	Current	Constant
Government final consumption expenditures
Private final consumption expenditures
Gross capital formation*
Exports of Goods and Services
Less: Imports of Goods and Services
Gross Domestic Product

*Gross is misspelled Cross in many of the tables.