Macroeconomics Help?

Your completed Homework assignment should be at least three to four pages in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. All references and citations used must be in APA style.

Unit III (ECON Macroeconomics Fourth Edition) William A. McEachern, Univ of Conn.

CH 5:

3. (Aggregate Demand and Supply) Review the information on demand and supply curves in Chapter 4. How do the aggregate demand and aggregate supply curves presented in this chapter differ from the market curves of Chapter 4?

6. (Supply-Side Economics) One supply-side measure introduced by the Reagan administration was a cut in income tax rates. Use an aggregate demand/aggregate supply diagram to show what effect was intended. What might happen if such a tax cut also shifted the aggregate demand curve?

CH 6:

1. (Income Approach to GDP) How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income approach. Consider the following data for the selling price at each stage in the production of a 5-pound bag of flour sold by your local grocer. Calculate the final market value of the flour.

Stage of Production Sale Price

Farmer $0.30

Miller $0.50

Wholesaler $1.00

Grocer $1.50

2. (Expenditure Approach to GDP) Given the following annual information about a hypothetical country, answer questions a through d.

Billions of Dollars

Personal consumption expenditures $200

Personal taxes 50

Exports 30

Depreciation 10

Government purchases 50

Gross private domestic investment 40

Imports 40

Government transfer payments 20

a. What is the value of GDP?

b. What is the value of net domestic product?

c. What is the value of net investment?

d. What is the value of net exports?

8. (Consumer Price Index) Calculate a new consumer price index for the data in the following exhibit. Assume that current-year prices of Twinkies, fuel oil, and cable TV are $0.95/package, $1.25/gallon, and $15.00/month, respectively. Calculate the current year’s price index. What is this year’s percentage change in the price level compared to the base year?

Product	(1) Quantity in Market Basket	(2) Price in Base Year	(3) Cost of Basket In Base Year	(4) Prices in Current Year	(5) Cost of Basket in Current Year (5)*(1)*(4)
Twinkies	365 Packages	$0.89	$324.85	$0.79	$288.35
Fuel Oil	500 gallons	$1.00/gallon	$500.00	$1.50	$750.00
Cable TV	12 months	$30.00/month	$360.00	$30.00	$360.00
			$1,184.85		$1,398.35

9. (Consumer Price Index) Given the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2013 in each of the following situations:

a. The CPI equals 200 in 2012 and 240 in 2013

b. The CPI equals 150 in 2012 and 175 in 2013

c. The CPI equals 325 in 2012 and 340 in 2013

d. The CPI equals 325 in 2012 and 315 in 2013