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```					  Class Time: ______________ Name: ___________________________
HW # 2
Due Feb. 18 (W), 2009: MWF Class
Feb. 19 (TH), 2009: T TH Class

“Principles of Macroeconomics”
NSCC - Spring 2009
Professor: Moonsu Han

Question 1 Bring definitions for following terms and explain why we are calculating
those terms in Macroeconomics ONLY for Bold and Italic terms. (5 Pts.)
1. GDP (Definition only):

2. Real GDP (Definition and Why?):

3. GDP Deflator (Definition and Why?):

4. Microeconomics vs. Macroeconomics:

5. CPI (Definition and Why?):

1
Question 2 Below is some data from the land of milk and honey.

Year         Price of Milk      Q of Milk      Price of Honey   Q of Honey
2006              \$1             10000               \$4            5000
2007              \$2             20000               \$5            6000
2008              \$3             30000               \$5            7000

1. Compute nominal GDP, real GDP, and the GDP deflator for each year, using
2006 as the base year. Need to show detailed calculation. (3 pts.)

2. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator
in 2007 and 2008 from the preceding year. Need to show detailed calculation.
(3 pts.)

3. Did economic well-being rise more in 2007(=from 2006 to 2007) or 2008(from
2007 to 2008)? Explain. (2 pts.)

2
Question 3
Suppose that there is a country called NSCC Republic. The Bureau of Labor Statistics of
NSCC Republic announced that in January 2009, of all working age adult populations,
100,000 were unemployed, 700,000 were employed, and 200,000 were not in the labor
force. How big was the labor force? (1 pt.) What was the labor-force participation rate?
(1 pt.) What was the unemployment rate? (1 pt.)Need to show detailed calculations.

Question 4 (3 Pts.)
Fill in the missing values in the table of data collected in the household survey for the
year 2009

Working-age population

Employment                                        180,000

Unemployment

Unemployment rate                                 6%

Labor Force

Labor Force Participation rate                    70%

3
Question 5 Suppose that people consume only three goods, as shown in following table.
(Total 6 pts.)

2003 Price                     \$2                     \$200                  \$1
2003 Quantity                 100                      10                  200
2004 Price                     \$3                     \$250                  \$2
2004 Quantity                 150                      20                  250
Note: Use fixed basket of goods: 100 balls, 10 clubs, 200 Gatorades. Base year is 2003.

1. What is the percentage change in the price of each of the three goods? (1 pt.)
What is the percentage change in the overall price level (inflation rate)? (3 pts.)

2. Do golf clubs become more or less expensive relative to Gatorade? (1 pt.) Does
the well-being of some people change relative to the well-being of others?
Explain. (1 pt.)

4

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