PMBA315 Final Exam Assignment

Quantitative

1.

Table 1

a. Based on table1 above, calculate the quarter to quarter rate of change from Q295 to Q395? Carry your answer to two decimal places. (3)

b. Based on table1 above, calculate the annualized quarter to quarter rate of change from Q295 to Q395? Carry your answer to two decimal places. (3)

2. Suppose that Tonya, a customer of Bank A, deposits $400 in cash from her piggy bank into her checkable account. Assume that the reserve requirement equals 5% for all checkable (transactions) deposits.

a. First, using the T-account below, show how this transaction affects Bank A's assets and liabilities. (5)

b. Now, suppose that Bank A loans all of its excess reserves and the loan is deposited into Bank B. Show how this loan deposit affects the balance sheet of both banks. Assume that Bank B does not immediately loan out its excess reserves. (4)

c. Using the information in the balance sheets, compute the change in the money supply throughout the entire banking system caused by the initial $400 deposit. Assume all banks immediately loan any excess reserves (4)

3. Labor Market

This table shows the 2001-2002 data for males and females ages 16 and over.

 Category | 2001 | 2002 | 2002 | May

 |_________________|__________________________|change

 | IV | I | Mar. | Apr. | May |

______________________|________|________|________|________|________|_______

 HOUSEHOLD DATA | Labor force status

 Employment..........| 134,308| 133,894| 133,894| 133,976| 134,417| 441

 Unemployment........| 7,983| 7,975| 8,111| 8,594| 8,351| -243

Not in labor force....| 70,467| 71,342| 71,329| 70,922| 70,889| -33

Civilian Population...| 213,210| 213,664| 213,334| 213,492| 213,658|

a. What is the size of the civilian labor force for March 2002? (2)

b. Given the data in the table above, what is the labor participation rate for March 2002? Carry your answer to two decimal places. (3)

c. Given the data in the table above, what is the unemployment rate for March 2002? Carry your answer to two decimal places. (3)

Non-quantitative

4. Indicate whether the following economic indicators are leading, lagging or coincident and pro-cyclical or countercyclical. Explain your answer.

a. Payroll employment (3)

b. Housing permits (3)

c. Unemployment (3)

5. GDP

a. What does GDP measure (explain thoroughly)? (3)

b. What are the shortcomings of GDP(explain thoroughly)? (3)

c. What can be done to remedy GDP’s shortfalls(explain thoroughly)? (3)