Purchase Solution

Labor force and nominal vs. real GDP

Not what you're looking for?

Ask Custom Question

Please see attached questions or questions below:

1. The size of the labor force in a community is 1,000, and 850 of these folks are gainfully employed. In this community, 50 people over the age of 16 do not have a job, and are not looking for work. In addition, 80 people in the community are under the age of 16. The unemployment rate is:

2. Suppose nominal GDP in 2005 was $12 trillion and in 2006 it was $14 trillion. The general price index in 2005 was 100 and in 2006 it was 104. Between 2005 and 2006 real GDP rose by what percent?

3. The consumer price index was 190.7 in January of 2005, and it was 198.3 in January of 2006. Therefore, the rate of inflation in 2005 was about:

4. As the Euro appreciates in value relative to the U.S. dollar, what happens to the price of U.S. goods in Europe? What happens to the price of European goods in the U.S.?

Why would a country (for example China) choose to keep their currency relatively pegged to the U.S. dollar? If the U.S. dollar were to appreciate considerably against most currencies, what would be the effect on Chinese exports to countries other than the U.S.?

5. Answer the next question on the basis of the following production possibilities data for Landia and Scandia:
Landia production possibilities:
A B C D E
Fish 8 6 4 2 0
Chips 0 4 8 12 16
Scandia production possibilities:
A B C D E
Fish 48 36 24 12 0
Chips 0 12 24 36 48
Refer to the above data. What would be feasible terms of trade between Landia and Scandia?

6. The Republic of Republic produces two goods/services, fish (F) and chips (C). In 2006, the 200 units of F produced sold for $3 per unit and the 500 units of C produced sold for $1 per unit. In 2007, the 300 units of F produced sold for $4 per unit, and the 600 units of C produced sold for $2 per unit. Calculate Real GDP for 2007, assuming that 2006 is the base year

7. Country A produces two goods, elephants and saddles. In the year 2006, the 30 units of elephants produced sold for $3,000 per unit and the 50 units of saddles produced sold for $300 per unit. In 2007, the 40 units of elephants produced sold for $4,000 per unit, and the 60 units of saddles produced sold for $250 per unit. Real GDP for 2007, assuming that 2006 is the base year is:

Thanks in advance for your help.

Purchase this Solution

Solution Summary

Labor force, nominal vs. real GDP, currency appreciation and inflation rate questions.

Solution Preview

The size of the labor force in a community is 1,000, and 850 of these folks are gainfully employed. In this community, 50 people over the age of 16 do not have a job, and are not looking for work. In addition, 80 people in the community are under the age of 16. The unemployment rate is:

The unemployment rate is the percentage of the labor force who are looking for work. Those not looking for work, or too young to work, are not counted. We see here that the labor force is 1000 - 50 -80 = 870. Therefore the unemployment rate is 20 / 870 = 2.3%

2. Suppose nominal GDP in 2005 was $12 trillion and in 2006 it was $14 trillion. The general price index in 2005 was 100 and in 2006 it was 104. Between 2005 and 2006 real GDP rose by what percent?

Real GDP = nominal GDP/ price index
For 2005, we don't need to make any adjustments since the price index is 1.
For 2006 we find
Real GDP = 14 trillion/ 1.04 = $13.5 trillion
The percent change is found by taking the difference and dividing by 2005 GDP. This gives us
1.5 / 12 = 12.5%

3. The consumer price index was 190.7 in January of 2005, and it ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.