P1. Apply the approximation rules for growth rates in the following situations: a) Labor income equals the average wage times the number of employed workers (YWN). The average wage grows at 3%. Employment grows at 1%. Find the growth rate of labor income. b) Real GDP (1) equals nominal GDP () divided by the aggregate price level (Y Nominal GDP is growing at 6%. The inflation rate is 2%. Find the growth rate of real GDP. P c) The demand function for a good is Qo-6p Find the percentage change in the quantity demanded (Q) when the price of the good (P) rises by 4%.
P1. Apply the approximation rules for growth rates in the following situations:
a) Labor income equals the average wage times the number of employed workers (YWN). The average wage grows at 3%. Employment grows at 1%. Find the growth rate of labor income.
b) Real GDP (1) equals nominal GDP () divided by the aggregate
c) The
d) Suppose you have a credit card balance (D) that, if unpaid, grows at a nominal interest rate of 7% every year. Prices (P) grow at a rate of inflation of 1% per year. Calculate the annual percentage change in the real value of your credit card debt (DD/P).
e) Suppose nominal GDP (Y) grows at 4%, prices (P) grow at 3% and the population (POP) grows at 2%. Find the growth rate of real GDP per person (y = Px POP
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