EC 202- Macroeconomics Essay Examples
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Problem Set Homework Assignment #2
1. Over the last 125 years in the United States, unemployment reached its highest rate
A) in the Panic of 1893.
B) in the 1930s.
C) in the period between World War II and the Korean War.
D) in the Great Recession of the late 2000s.
2. When Joe, who is among the highest-paid workers in a field in which there are numerous job openings across the nation, recently became unemployed, what is the opportunity cost of job search for him and what does it imply about how long he is likely to be unemployed? ) (2 Points)
For Joe the opportunity cost for job search is that there are numerous openings and chances of being unemployed for long are minimal
3. Please state 3 criticisms of the unemployment rate (3 Points)
Discouraged workers: make the unemployment rate lower than it actually is
Collecting benefits but not seeking jobs: individual receiving unemployment benefits actually not wanting to work increase unemployment rate
Underemployed: part-time workers are classified as employed but may seeking fulltime employment
4. Which of the following would be considered a member of the labor force?
A) an engineer who has been laid off a year ago and since then has not looked for work
B) an inmate in a state prison making license plates
C) a person in a mental institution
D) a computer programmer looking for work
5. The Nominal income per person in the United States in 1960 was about $2,800 per year, while in 1990 nominal income per person was about $21,000. What do these two nominal figures tell us? (2 points)
These two values indicate that nominal income per person has increase by $18,200 without taking into account inflation
6. Suppose Country A and Country B each have the same real Gross Domestic Product (GDP), equal to $440 billion. Country A has 100 million people and Country B has 175 million people. In this situation, per capita real Gross Domestic Product (GDP) is
A) the same in both countries.
B) higher in Country A.
C) higher in Country B.
D) an irrelevant factor.
per capita real GDP=real GDPPopulation
per capita real GDP for country A=$440 billion100million=$4400
per capita real GDP for country B=$440 billion175million=$2514
7. From the Table 1 above, calculate the real GDP in 2010 through 2013 and state the base year (5 Points)
Calculations (base year 2011)
real GDP=Nominal GDPPrice deflator*100
real GDP 2010=50095.4*100=524.1
real GDP 2011=600100*100=600
real GDP 2012=700102.5*100=682.9
real GDP 2013=800103.1*100=775.95
8. Which of the following would NOT be a part of personal income?
A) indirect business taxes
B) payments received from Social Security
C) retirement checks
D) corporate dividend payments to shareholders
9. According to your text, which of the following countries currently has the highest annual per capita Gross Domestic Product (GDP) growth rate?
10. Economic growth is best measured by increases in
A) nominal personal income.
B) nominal Gross Domestic Product (GDP).
C) per capita real Gross Domestic Product (GDP).
D) per capita nominal Gross Domestic Product (GDP).
11. FromTable 2 above, which country experienced the greatest economic growth from 2012 to 2013? (hint: You need to calculate per capita GDP for each year).
per capita real GDP=real GDPPopulation
per capita real GDP for country A, 2012=$280000 million832.5million=$336.34
per capita real GDP for country A, 2013=$300000 million849.5 million=$353.15
per capita real GDP for country B, 2012=$235000 million14.8 million=$15878.38
per capita real GDP for country B, 2013=$260000 million14.9 million=$17449.66
per capita real GDP for country C, 2012=$28200 million2.7 million=$10444.44
per capita real GDP for country C, 2013=$33400 million3 million=$11133.33
per capita real GDP for country D, 2012=$5200000 million248.8 million=$20900.32
per capita real GDP for country D, 2013=$5445000 million250 million=$21780
Country with the greatest economic growth is Country B ($per capita GDP increased by $1571.28 million)
12. Costs associated with economic growth include all of the following EXCEPT
A) environmental pollution.
B) psychological problems such as depression.
C) urban congestion.
D) improved health care.
13. When you are purchasing gap clothing and baseball tickets (it’s spring after all), what type of good are you buying? Luxury good
14. Which of the following is considered investment?
A) Maina purchases a new car for commuting to and from work.
B) Jane purchases a new car for commuting to and from school.
C) Johnny buys a new car for his wife as an anniversary gift.
D) James purchases a new car to replace an old car in his cab business.
15. Define the marginal propensity to consume (MPC) and give an example (2 Points)
Marginal propensity to consume refers to the share in change of consumption divided by the change in income.
For example, an increase in income by $200 results to purchasing a new watch worth $100 the MPC will be 0.5 ($100 divided $200).
16. The consumption function shifts upward when
A) real income increases.
B) saving increases.
C) the real wealth of the average household increases.
D) population decreases.
MPC=change in consumtpionchange in income
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