6/ During the early 2000s, the Case-Shiller U.S. HomePrice Index, a measure of average home prices, rosecontinuously until it peaked in March 2006. FromMarch 2006 to May 2009, the index lost 32% of its value.Meanwhile, the stock market experienced similar upsand downs. From March 2003 to October 2007, theStandard and Poor's 500 (S&P 500) stock index, a broadmeasure of stock market prices, almost doubled, from800.73 to a high of 1,565.15. From that time until March2009, the index fell by almost 60%, to a low of 676.53.How do you think the movements in home prices bothinfluenced the growth in real GDP during the first halfof the decade and added to the concern about maintain-ing consumer spending after the collapse in the hous-ing market that began in 2006? To what extent did themovements in the stock market hurt or help consumerspending?

A stock index, sometimes known as a stock market index, is an index that monitors a stock market or…

Answered: During the early 2000s, the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that the housing market is in equilibrium in year 1. In year 2, the mortgage rate that banks charge consumers decreases, but producers are not affected. Also in year 2, the cost of lumber used to build homes decreases. Which of the following is most likely to be the equilibrium change? a The equilibrium will be at point C before the change in expectations and point B after the change b The equilibrium will be at point A before the change in expectations and point B after the change c The equilibrium will be at point A before the change in expectations and point E after the change d The equilibrium will be at point E before the change in expectations and point A after the change
The UN Food and Agriculture Organization (FAO) has developed a Food Price Index that shows that food prices spiked (increased) during the crisis of 2008. List at least two reasons for this trend.
Based on research conducted by the Department of Economic Analysis, the government and policy advisors of an economy believe that the full employment GDP is $7500 billion, and Pe, the overall expected price level is 118. In addition, the researchers estimate that the short run aggregate supply equation is Y = Ypot + 80 (P- Pe), where Ypot is the potential level of output. In 2016, the population was 400 million, and the structure of the economy was described by the following equations for household consumption behavior and taxes received: C = 100+ 0.8DI, and T = 0.25Y where all monetary values are in billions of dollars. Government spending was fixed at $1700 billion, and firm's investment behavior was fixed at $800 billion. Trading is allowed in this economy and in 2016, trading occurred such that the trade account was balanced. That is, net exports (X-IM) was equal to zero. Question 17 of 20) Now consider that in in the following year (2017), the government decided to implement a…
In August of 2020, the United States unemployment rate was 8.4%; in September, it was 7.8%. Which of the following is true? There is a 7.7% decrease in the United States unemployment rate from August to September, 2020. There is a 0.077 percentage point decrease in the United States unemployment rate from August to September, 2020. There was a 0.071 percentage point decrease in the United States unemployment rate from August to September, 2020. There was a 0.6% decrease in the United States unemployment rate from August to September, 2020. There was a 7.1% decrease in the United States unemployment rate from August to September, 2020.
Briefly discuss the difference between rational and adaptive expectations. (100 words max)
In the research paper “The productivity puzzle”, Professor Jagjit Chadha (2017) does an economic analysis of the UK economy. He states: “The problem following the financial crisis of 2007-08 is not so much that we cannot account for growth in output in this manner, as we approach the tenth anniversary, but more that the growth in output seems concentrated in the increase of inputs rather than productivity. It is as though the economy rather than working smarter has simply been working harder.” Critically evaluate the above statement.
Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019. The cost of each item in the basket and the total cost of the basket are shown for 2017. Perform these same calculations for 2018 and 2019, and enter the results in the following table. **THE TABLE IS ATTACHED** Suppose the base year for this price index is 2017. In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Between 2017 and 2018, the CSPI increased by_________%. Between 2018 and 2019, the CSPI increased by_________%. Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. As the price of textbooks increased, more and more students…
Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019. The cost of each item in the basket and the total cost of the basket are shown for 2017. Perform these same calculations for 2018 and 2019, and enter the results in the following table.
Because the long-term trend has been for prices to rise, adjusting Nominal GDP to Real GDP involves inflating the lower prices before the base year and deflating the higher prices after the base year. 1) True 2) False
Improved methods of inventory control were supposed to reduce fluctuations in inventory stocks. It is clear that these methods have helped reduce the equilibrium inventory/sales ratios in both the manufacturing and trade sectors over the past decade. Yet we find that during the 2001 recession, inventory investment accounted for more than the total decline in real GDP, the first time that had happened since 1949. Explain whether this result is due to a set of odd coincidences, or whether the improved methods of inventory control actually caused bigger fluctuations in inventory investment relative to final sales.
Suppose that currently the consumer prices index (CPI) is 359.7 and that at the same time last year it was 343.5. If an index-linked pension was £503 per month this time last year, calculate how much it should be per month now. (Give your answer to the nearest pound. Do NOT include the '£' sign. Assume the pension is index linked using the CPI.) Answer:
In 2011, the IS curve of the Philippines was estimated as Y=1100−25 i. In the money market the LM curve was computed as i= 0.2/5 Y −24. Solve for the equilibrium interest rate and expenditure(income)

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