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ECO121 - Test 01 - Individual Assignment 01 - Summer2023

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Vu Minh Hieu (K18 HL)
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17 views4 pages

ECO121 - Test 01 - Individual Assignment 01 - Summer2023

Uploaded by

Vu Minh Hieu (K18 HL)
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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STUDENT INFORMATION

Name: VŨ MINH HIẾU Roll number: HS181160


Room No: Del229 Class: IB1807

FOR TEACHER ONLY


MARK MARKED BY Signature of Proctor
(NAME AND SIGNATURE)

ECO121_Test 01_Individual Assignment 01

Question1. (2 points)

Fill in blanks in table below;


Year 1 (2000) Year 2 (2003) Year 3 (2006)
Market Basket Items # of Units $ per unit Total Cost $ per unit Total Cost $ per unit Total Cost
Cheese 2 lbs $1.75 $3.50 $1.50 …..$ 3.00 $1.50 ……..$
3.00

Blue Jeans 2 pairs $12.00 $.......


24.00 $15.50…..$ 31.00 $20.00 40.00
…….$
Gasoline 10 gallons $1.25 $.......
12.50 $1.60 …...$ 16.00 $2.70 27.00
……...$
50.00 70.00
Total Cost of Basket ---------$ ------
39.50 $ ------ $ ------ $

Using year 1 as our base year, using the formula above to calculate the index

and compare the CPI inflation rate over those years

% increase in cost of
the basket over 2000-
Year 1 Index = (base year)? CPI= 100 CPI inflation rate? 2003 = 26.58%

% increase in cost of the


Year 2 index? CPI = 126.58 CPI inflation rate? basket over 2003 - 2006
= 40.00%

Year 3 Index? CPI = 177.22 The CPI inflation rate over those year
tend to increase significantly
Question 2 (2 points):
Suppose there is an economy that produces only two goods: tequila and peyote. In 2008, the
economy produced 100 litres of tequila and 200 peyote plants. The unit prices (per litre or per
plant) in 2008 were $100 and $500. 1000 people were employed in the tequila sector, and the
peyote sector employed 500.

In 2009, the weather was particular sunny and hot, which is good for tequila production but
bad for the cultivation of peyote. As a result, the economy produced 120 litres of tequila but
only 191 peyote plants in 2009.

The tequila and peyote sold for $90 per litre and $550 per plant that year. 1100 people were
employed in the tequila sector, while only 450 people worked in the peyote sector.

Answer the following questions:

a. How much is Nominal GDP in 2008 and 2009? What is the percentage change?
b. How much is Real GDP in 2008 and 2009, by considering 2008 as the base year?
What is the percentage change?
c. How much is the GDP deflator in the two years? By what percentage does the price
level change from the base year to 2009?
d. What was the growth rate of average labour productivity for the whole economy
between 2008 and 2009?

Question 3 (3 points)
Given the following annual information about a hypothetical country, answer the following questions
(Expenditure Approach to GDP)

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?

Given the following annual data, answer the following questions;

Billions of Dollars
New residential construction $500
Purchases of existing homes 250
Sales value of newly issued stocks and bonds 600
New physical capital 800
Depreciation 200
Household purchases of new furniture 50
Net change in firms’ inventories 100
Production of new intermediate goods 700
a. What is the value of gross private domestic investment?
b. What is the value of net investment?
c. Are any intermediate goods included in the measure of gross investment?

Question 4. (3 points)
1. Indicate whether each of the following groups is helped or hurt by inflation
A. Banks who extend many fixed rate loans…………….
B. Students who put savings in a fixed rate savings account……………

C. Mechanics who pay for new tools with a fixed rate loan………………

D. People who sign a four-year lease on an apartment……………….

E. Homeowners who purchase a home and have a 30-year fixed rate mortgage………………..

F. Homeowners who purchase a home and have a 30-year adjustable rate mortgage……………….

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