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Cost of a Market Basket of Goods

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1) during the course of a year, the labor force consists of the same 995 people of these, 17 lack skills that employers desire and hence remain unemployed throughout the year. All the same time , every month during the year, 38 different people become unemployed, and 38 other different people who were unemployed find jobs. There is no cyclical unemployment.
a) Calculate the frictional unemployment rate ----------% (response as a percentage rounded to two decimal places).

5) Suppose in 2014, the cost of a market basket of goods was $2,021. in 2016, the of the same market basket of goods was $2,107. Calculate the price index for 2016, using the price index formula, assume 2014 is the base year. Index number rounded to one decimal place.

9)Consider the following hypothetical data for the U.S. economy in 2018 (in trillions of dollars), and assume that there are no statistical discrepancies or other adjustments.
category value category value
profit $2.7 exports $1.7
indirect business taxes & transfers 0.7 government transfer payments 2.1
rent 0.6 personal income tax & non tax payment 1.5
interest 0.7 imports 1.6
wages 8.2 corporate taxes & retained earnings 0.5 depreciation 1.3 social security contribution 2.2 consumption 12.1 government spending 1.8 Calculate the gross domestic product

10)The following table gives nominal GDP and the price index for two years. Find real GDP in each year, and fill in the table. (round answers to two decimal place)
year nominal GDP price index real GDP
2010 6,700 105
2011 7,236 109
real GDP= nominal GDP/price index 100

11) Alden has a summer beach cottage that he has owned for years. The cottage is valued At$100,000. This year, Alden spends $300 on paint 500 on trees, and then paints the exterior of the cottage and plants the trees himself. If he had hired a fissional painter, it would have cost $1000 to paint the cottage.(not including of paint), and if he had hired a professional landscaper would have cost $375 ( not including the cost of the trees) to do the planting. How much does Alden's improvements to the cottage add to GDP this year? The increase in P would be $-------------.

12) title value
personal income $15,604.9 billion
disposable personal income $13,618.1 billion
personal consumption expenditures $12,429 billion
The difference between personal income and disposable income represents personal ( savings or tax payments) which e fourth quarter of 2015 amount to ------------------billions.

22) An economy's consumption function is depicted in the table below.
disposable income yd ( ($billions) consumption c ( $ billion)
0 100
125 188
250 275
375 363
500 450
625 538
The average propensity to consume when the disposable income is $625 billion is equal to
a. 0.70 b. 0.90 c. 0.86 d.0.140

23) If the interest rate increases, which of the following will occur?
a.) The quantity of planned investment will increase
b) the investment function shift leftward
c)the quantity of planned investment will decrease
d.) the investment function will shift rightward

24) Complete the following table which depicts a hypothetical economy in which the marginal propensity to consume is constant at all levels of real GDP and investment spending is autonomous. Equilibrium real GDP is equal to$8,000. There is no government. Real GDP Consumption Saving Investiment
$2000 $2,500
4000 4,000
6000 5,500
8000 7,000
10,000 8,500
12000 10,000

25)The marginal propensity to consume (MPC) is .60. The change in real DP will be $ -------------(round answer to nearest dollar.)

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Solution Preview

1) during the course of a year, the labor force consists of the same 995 people of these, 17 lack skills that employers desire and hence remain unemployed throughout the year. All the same time , every month during the year, 38 different people become unemployed, and 38 other different people who were unemployed find jobs. There is no cyclical unemployment.
a) Calculate the frictional unemployment rate ----------% (response as a percentage rounded to two decimal places).

Frictional unemployment is also known as job search unemployment. The 17 unemployed because of a mismatch in skill set are structurally unemployed. They are part of the work force, but are not considered as frictionally unemployed in this calculation. The 38 who find jobs are no longer unemployed. They are now a part of the workforce. The 38 unemployed must be considered as structurally unemployed. At any point in time, only 38 persons are structurally unemployed. Therefore, structural unemployment is 3.82% ((38/995)*100)

5) Suppose in 2014, the cost of a market basket of goods was $2,021. in 2016, the of the same market basket of goods was $2,107. Calculate the price index for 2016, using the price index formula, assume 2014 is the base year. Index number rounded to one decimal place.

Price Index for the base year is 100. Since the base year is 2014, that will be the denominator. So take 2016, divide by 2014 and then multiply by 100. ((2021/2107)*100) Price Index for 2016 = 95.92

9)Consider the following hypothetical data ...

Solution Summary

This solutions explanation addresses several aspects of macroeconomics problems including unemployment calculations, Index and GDP/rGDP calculations.

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