1. examples of problems

2. Use the table below to calculating GDP. Transfer Payments$54 Interest Income$150 Depreciation$36 Wages$67 Gross Private Investment$124 Business Profits$200 Indirect Business Taxes$74 Rental Income$75 Net Exports$18 Net Foreign Factor Income$12 Government Purchases$156 Household Consumption$304 GDP = C + G + I + (EX - IM) In this case: C = $304. G = $156. I = $124. (EX - IM) = $18. Therefore: GDP = $304 + $156 + $124 + $18 GDP = $602

3. Transfer Payments$54 Interest Income$150 Depreciation$36 Wages$67 Gross Private Investment$124 Business Profits$200 Indirect Business Taxes$74 Rental Income$75 Net Exports$18 Net Foreign Factor Income$12 Government Purchases$156 Household Consumption$304 Compensations of employees + Rental income + Interest income + Profits + Indirect Business Taxes + Depreciation W = $67 R = $75. i = $150. PR = $200. IBT = $74 D = $36 Therefore: GDP = $67 + $75 + $150 + $200+ $74 + $36 GDP = $602

4. GNP = GDP + NFIA Net Factor Income from Abroad = Receipts of factor income from the rest of the World – Payments of factor income to the rest of the World GNP = $ 602 + $12 = $ 614 NNP = GNP – Depreciation NNP = $ 614 – $36 = $ 578 National Income = NNP - indirect taxes NI = $ 578 - $74 = $504 Transfer Payments$54 Interest Income$150 Depreciation$36 Wages$67 Gross Private Investment$124 Business Profits$200 Indirect Business Taxes$74 Rental Income$75 Net Exports$18 Net Foreign Factor Income$12 Government Purchases$156 Household Consumption$304

6. The Bureau of Statistics conducts a monthly survey to estimate the unemployment rate. Respondents’ answers are used to estimate the number of people who are employed, unemployed, and in the labor force. a. Calculate the unemployment rate. b. Calculate the unemployment rate taking into account discouraged workers. a. Unemployment rate = 12,036 / (99,093 + 12,036) = 10.83% b. (12,036 + 1,849) / (99,093 + 12,036 + 1,849) = 12.29%

7. Use the information in the figure to calculate the unemployment rate and the labor force participation rate.

8. Use the following table to answer questions 1-3. Suppose that in the small economy of X-land there were 4 goods in the years 2006-2008. The details are contained in the following table: Goods CPI basket Base year 2006 Quantity Base year 2006 Price 2007 Quantity 2007 Price 2008 Quantity 2008 Price A1314252 B3627263 C3536374 D2415272 Use the table to answer : 1. What’s the CPI for X-land in the year 2007? 2. What’s the GDP deflator for X-land for the year 2008? 3. What’s the inflation rate in X-land for the year 2008 (using the CPI)?

9. 1. What’s the CPI for X-land in the year 2007? Consumer price index 2007 = (price of basket of goods and services in current year/price of basket of goods and services in base year)x100 = (1x2+3x2+3x3+2x2)/(1x1+3x2+3x3+2x1)x100=21/18x100=116,6 2. What’s the GDP deflator for X-land for the year 2008? Nominal GDP= Q2008xPrice2008=70 Real GDP=Q2008xPrice2006= 5+12+21+7=45 GDP deflator =70/45x100= 155,5 3. What’s the inflation rate in X-land for the year 2008 (using the CPI)? Inflation rate= (CPI in year2 - CPI in year1)/ CPI in year1x100 CPI in 2008= (price of basket of goods and services in 2008/price of basket of goods and services in the base year)x100 =(2+9+12+4)/(1+6+9+2)x100=27/18x100=150 CPI in 2007= 116,6 Inflation rate=(150-116,6)/116,6=28,6

10. Number of adults (population)14.000 Number of adults who are paid employees4.000 Number of adults who work in their own businesses1.200 Number of adults who are unpaid workers in a family member’s business600 Number of adults who were waiting to be recalled to a job from which they had been laid off 200 Number of adults who do not have a job, are available for work, and have tried to find a job within the past three months 1000 Number of adults who do not have a job, are available for work, but have not tried to find a job within the past three months 380 Number of adults who are full-time students2600 Number of adults who are homemakers or retirees1200 Use the table to answer : 1.How many people were employed in X-land in 2012? 2.How many people were unemployed in X-land in 2012? 3.What was X-land’s labor-force participation rate in 2012? 4.What was X-land’s unemployment rate in 2012?

11. 1. Refer to Table, How many people were employed in X-land in 2012? People with jobs are employed. 4000+1200+600=5.800 2. Refer to Table 1. How many people were unemployed in X-land in 2012? People who are looking for jobs, and available for work are unemployed. 200+1000= 1200 3. Refer to Table 1. What was X-land’s labor-force participation rate in 2012? labor force participation rate = labor force/population Labor force = employed + unemployed = 5800+1200=7000 labor force participation rate = 7000/14000x100=50% 4. Refer to Table 1.What was X-land’s unemployment rate in 2012? unemployment rate = unemployed/(employed + unemployed) unemployment rate =1200/7000x100=17,1%