1. EXTRA EXERCISES TO PREPARE CHRISTMAS EXAM
6 EMT 6 EWE 6EW

2. 1) GDP CALCULATION APPROACHES
SYLDAVIA is a country in the East of Europe. The wealth of the economy is created by 3 companies. Company EMILIA produces fancy sports clothing made from cotton and other materials imported from neighbour country PODVARSKA (value of the imported materials is € ). Twenty designers and 1085 workers are employed by EMILIA and earn each € per year. Half of the turnover is sold to PODVARSKA. The export value is € Company BORISKO is a toy factory. The company produces wooden toys using wood from the local forestry company WLAD, purchased at a value of € ; the other materials used in the production come from overseas (USA); value is € Most of the toys are exported: 70% of total turnover. Total turnover of BORISKO is € workers each earn € per year. Company WLAD exploits all forests in the country. They only work for the local toy industry. Their salary costs: € per year. Calculate SYLDAVIA’s GDP using the 3 calculation approaches.

3. …………………… approach
…………………… approach

4. …………………… approach

5. 2) NOMINAL AND REAL GDP Fill-in the following table (mio €) Year
Nominal GDP
Real GDP
GDP deflator 1
7.000
1,00 2
8.350
1,11 3
9.740
8.355 4
10.120 5
10.852
1,02
Extra information: the economic growth between Y 3 and Y 4 is 12,65%
Question: what is the reference year? Why?
Question: what is the inflation in year 3? Why?
(compared to the reference year)

6. 3) PURCHASING POWER PARITY (PPP)
Imagine you are a British citizen going on a trip to New York. If the price of a Big Mac is $ 4,00 in New York as compared to £ 2,50 in your home town, you would expect the exchange rate between $ and £ to be: 1 $ = ……………. £ But as you go to the bank to buy $, it appears that the actual exchange rate is: 1 $ = 0, 70 £ The first relation is a better way to compare wealth (GDP figures) between countries, because it shows the purchasing power relation between countries (if this is equal to 1, it would mean that both currencies have same purchasing power). Your conclusion on this small exercise: Imagine GDP/capita of US: 57,500 $ then GDP/per capita of UK in exchange rate: ………….. then GDP/capita of UK in PPP: ……………

7. 4) LABOUR MARKET (1) Fill-in the following table …………………………..
………………………….
………………………….
………………………….
………………………….
…………..
…………………………
……………

8. 5) LABOUR MARKET (2)
Calculate the following ratios based on the table of exercise 4
Ratio
Formula
Calculation
Employment rate
Unemployment rate
Participation rate