E 202 Homework 1 (INTRODUCTION TO MACROECONOMICS)

Question # 00046479 Posted By: expert-mustang Updated on: 02/04/2015 11:48 PM Due on: 02/05/2015
Subject Economics Topic Macroeconomics Tutorials:
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INTRODUCTION TO MACROECONOMICS

HOMEWORK # 1

18 points possible

NAME ______________________________

1. Consider the following numbers:

Consumption 2500 Government Spending 600

Imports 1300 Exports 1200

Inventory Investment -300 Fixed Investment*

700

Depreciation 200 Taxes 700

* Fixed investment is residential fixed investment plus non-residential fixed investment. Gross investment is fixed

investment plus inventory investment

Calculate

a. GDP _____________

b. Net Exports _____________

c. Final Sales _____________

d. Net Investment _____________

2. A household has income of $50,000, spends $30,000 and pays taxes of

$15,000. What is the household's level of saving? _________________

3. Suppose that nominal GDP in 1990 was $4 trillion and real GDP was $5

trillion. What was the GDP price deflator in 1990? _________________

4. Given that prices generally rise over time, do the figures in 3 suggest that

1990 comes AFTER the base year or BEFORE the base year? _________________

5. If real GDP is $6,000,000 and the population is 250, what is per capita GDP?

_________________

6. In 2005, I had a new home built at a cost of $150,000. This home provided services worth $10,000 in 2006.

In which categories of the national income accounts should this home appear? The choices are consumption,

fixed investment, inventory investment, government spending, and net exports.

2005: $ ___________ in _____________________________________

(amount) (category)

2006: $ ___________ in _____________________________________

(amount) (category)7. On December 28th, 2005, IBM produced a personal computer at a cost of $2,000. On January 3rd, 2006,

the computer was sold to the Indianapolis Police Department for $2,000. Describe how this computer should

show up in the national income accounts. Use the categories from the prior question

______: $_______ in _______________________________________

(year) (amount) (category)

______: $_______ in _______________________________________

(year) (amount) (category)

______: $_______ in _______________________________________

(year) (amount) (category)

What is the contribution of the computer to 2005 GDP? ______________

What is the contribution of the computer to 2006 GDP? ______________

8. On January 10th, 2006, the U.S. Department of the Treasury purchased a German-made armored car for

$75,000. Describe how this transaction should show up in the national income accounts. Use the categories

from the prior question

2006: $ ___________ in _____________________________________

(amount) (category)

2006: $ ___________ in _____________________________________

(amount) (category)

What is the contribution of the armored car to 2006 GDP? ______________

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