Midterm II

Please answer the following five questions.1. Suppose we have 2  countries - Gold Coast and Silver Coast. The following table represents  the nominal GDPs of both countries between 2008 and 2010.   (For both  countries, the base year is 2007.)YEAR Nominal GDP
(Gold Coast) GDP Deflator
(Gold Coast) Nominal GDP
(Silver Coast) GDP Deflator
(Silver Coast)
2008 $8000 102 $8000(###) ###-####$8500 110 $8000 99
2010 $9000 115 $8500 98a. Compute Real GDP for each year for both countries.  The Real GDP for the Gold coast would be 63 billion and the Real GDP  for the Silver Coast would be 104 billion.
b. Calculate the growth rates in real GDP for the periods 2008-2009 and 2009-2010 for both countries.
c. Compute the inflation rate for the periods 2008-2009 and 2009 and 2010 for both countries.
d. Explain in words the key differences in the macroeconomic experiences  of Gold Coast and Silver Coast.2. Suppose economic managers of the US  economy wish to expand output by $10 billion.  The managers know that  the marginal propensity to consume is .5 and that only the marginal  propensity to consume determines the value of the multiplier.  Given  these data and the goal of expanding output by $10 billion, by how much  should the government expand aggregate demand through the use of fiscal  policy?  Describe two different types of fiscal policy that might  accomplish this goal.3. Assume the Fed wants to contract economic  activity because it is concerned about inflationary pressures.  Explain  what type of open market operations the Fed will initiate in order to  accomplish this goal.  If the mandated reserve ratio is 20%, and the Fed  initially changes the money supply by $50 million as a result of its  activities, what will be the total change in the money supply?  Will the  money supply be expanded or reduced?4. Use the following Aggregate  Supply – Aggregate Demand diagram as a starting point for your  analysis.PY(real)a. Label the curves.
b. The Government decides to  increase payroll taxes in order to improve the finances of the social  security system.  What will happen to the short-term output and price  level of the economy?
c. Nominal wages rise by 4%, while labor  productivity rises by six percent.  What will happen to the short-term  output and price level of the economy?
d. As a result of bank  failures in Spain and the inability of the Italian government to borrow  money at low rates to fund its government debt, economic activity  sharply declines throughout the Euro zone.  What will happen to the  short-run output and price level of the American economy?5. Use the  following data to find the unemployment rate and the labor force  participation rate for the years 1992 and 1996.  (These data are taken  from the Economic Report of the President, 2013.)Year Number of people  unemployed Number of people employed Number of people who could be in  labor force
1992 9.6 million 118.5 million 192.8 million
1996 7.2  million 126.7 million 200.6 millionAfter finding these answers, evaluate  in one or two sentences how the labor market was performing between  1992 and 1996.I also have it in a word document if it is easier to send it that way for you to review