Q2. The table below shows CHINA'S NOMINAL AND REAL GDP for the years 1974 through years 1976. YEAR NOMINAL GDP (Billions of Yuan) REAL GDP (Billions of constant 1987 Yuan) 1974 279.6 397.6 1975 298.1 430.3 1976 289.0 408.4 (a) What is the difference between what NOMINAL GDP tells us and what REAL GDP (constant YUAN) tells us? Explain by referring to the way real GDP is calculated in principle compared with the way nominal. (b) GDP is calculated (HINT: Think about prices and quantities). (c) Calculate the GDP growth rates for CHINA for 1974 to 1975 and for 1975 to 1976. SHOW YOUR WORK. (d) Find the GDP deflator for each of the three years. SHOW YOUR WORK. (e) Find the rates of inflation for 1974 to 1975 and for 1975 to 1976. SHOW YOUR WORK. Q3. Suppose you are provided with the following information about an economy. There are 100 million working-age individuals in the economy. Of these 100 million, 50 million are currently working, 10 million are looking for work, 10 million stopped looking for work 2 months ago, and the remaining 30 million do not want to work. (a) Calculate the number of unemployed individuals, the size of the labor force, the unemployment rate, and the labor force participation rate. (b) Now suppose that of the 10 million individuals looking for work, 5 million stop looking for work. Given this change, calculate what will happen to the size of the labor force, the unemployment rate, and the labor force participation rate. Did the unemployment rate and participation rate move in the same direction? Explain. (c) Ignore part (b). Start with the original numbers. Suppose firms experience an increase in the demand for their products and they respond by increasing employment. Specifically, 2 million of the previously unemployed individuals now have jobs. Given this change, calculate what will happen to the following: (1) the size of the labor force; (2) the number of employed individuals; (3) the number of unemployed individuals; (4) the unemployment rate; and (5) the labor force participation rate.
Q2. The table below shows CHINA'S NOMINAL AND REAL GDP for the years 1974 through years 1976. YEAR NOMINAL GDP (Billions of Yuan) REAL GDP (Billions of constant 1987 Yuan) 1974 279.6 397.6 1975 298.1 430.3 1976 289.0 408.4 (a) What is the difference between what NOMINAL GDP tells us and what REAL GDP (constant YUAN) tells us? Explain by referring to the way real GDP is calculated in principle compared with the way nominal. (b) GDP is calculated (HINT: Think about prices and quantities). (c) Calculate the GDP growth rates for CHINA for 1974 to 1975 and for 1975 to 1976. SHOW YOUR WORK. (d) Find the GDP deflator for each of the three years. SHOW YOUR WORK. (e) Find the rates of inflation for 1974 to 1975 and for 1975 to 1976. SHOW YOUR WORK. Q3. Suppose you are provided with the following information about an economy. There are 100 million working-age individuals in the economy. Of these 100 million, 50 million are currently working, 10 million are looking for work, 10 million stopped looking for work 2 months ago, and the remaining 30 million do not want to work. (a) Calculate the number of unemployed individuals, the size of the labor force, the unemployment rate, and the labor force participation rate. (b) Now suppose that of the 10 million individuals looking for work, 5 million stop looking for work. Given this change, calculate what will happen to the size of the labor force, the unemployment rate, and the labor force participation rate. Did the unemployment rate and participation rate move in the same direction? Explain. (c) Ignore part (b). Start with the original numbers. Suppose firms experience an increase in the demand for their products and they respond by increasing employment. Specifically, 2 million of the previously unemployed individuals now have jobs. Given this change, calculate what will happen to the following: (1) the size of the labor force; (2) the number of employed individuals; (3) the number of unemployed individuals; (4) the unemployment rate; and (5) the labor force participation rate.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Q2.
The table below shows CHINA'S NOMINAL AND REAL GDP for the years 1974 through
years 1976.
YEAR
NOMINAL GDP
(Billions of Yuan)
REAL GDP
(Billions of constant
1987 Yuan)
1974
279.6
397.6
1975
298.1
430.3
1976
289.0
408.4
(a) What is the difference between what NOMINAL GDP tells us and what REAL GDP (constant
YUAN) tells us? Explain by referring to the way real GDP is calculated in principle compared
with the way nominal.
(b) GDP is calculated (HINT: Think about prices and quantities).
(c) Calculate the GDP growth rates for CHINA for 1974 to 1975 and for 1975 to 1976. SHOW
YOUR WORK.
(d) Find the GDP deflator for each of the three years. SHOW YOUR WORK.
(e) Find the rates of inflation for 1974 to 1975 and for 1975 to 1976. SHOW YOUR WORK.
Q3. Suppose you are provided with the following information about an economy. There are 100
million working-age individuals in the economy. Of these 100 million, 50 million are currently
working, 10 million are looking for work, 10 million stopped looking for work 2 months ago,
and the remaining 30 million do not want to work.
(a) Calculate the number of unemployed individuals, the size of the labor force, the
unemployment rate, and the labor force participation rate.
(b) Now suppose that of the 10 million individuals looking for work, 5 million stop looking for
work. Given this change, calculate what will happen to the size of the labor force, the
unemployment rate, and the labor force participation rate. Did the unemployment rate
and participation rate move in the same direction? Explain.
(c) Ignore part (b). Start with the original numbers. Suppose firms experience an increase
in the demand for their products and they respond by increasing employment.
Specifically, 2 million of the previously unemployed individuals now have jobs. Given this
change, calculate what will happen to the following: (1) the size of the labor force; (2)
the number of employed individuals; (3) the number of unemployed individuals; (4) the
unemployment rate; and (5) the labor force participation rate.
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