Name:___________________________

ECO 200 810 Principles of Macroeconomics Spring 2001 Homework #2, due Wednesday, 2/21

  1. In the nation of Timmyland, three goods are produced: toys, PBJ sandwiches, and apple juice. For three years, production and prices have been as follows:
year
 		           toys P          Q PBJ sandwiches

P         Q

 		apple juice

P        Q
1998
$5.00      200
$1.00      1000
$1.65     100
1999
$5.35       210
$1.05       1200
$1.80     105
2000
$5.70         220
$1.10       1250
$2.00     115
    1. Calculate the nominal GDP for all three years.

      2.  

       
       
       
       
       
       
       
       
       

    2. Using 2000 as the base year, calculate the real GDP for all three years.

      3.  

       
       
       
       
       
       
       
       
       
       
       

    3. By what percent has nominal GDP grown between 1998-1999? By what percent has real GDP grown between 1998-99? What accounts for this difference?

 
 
 
 
    1. Describe the difference between structural and frictional unemployment. Which is more serious, and why?

      2.  

       
       
       
       
       
       
       
       
       
       
       

    2. In chapter 6 we discussed several problems with the official unemployment rate. What factors cause this official rate to UNDERSTATE the unemployment problem?

 
 
 
 
 
 
 
 
 
  1. Use the table below to answer the following question.
Year Price of Gasoline

(per gallon)

 CPI (1992=100)
1960
$ .27
 20.9
1970
$ .33
 27.9
1980
$1.23
 60.7
1990
$1.21
 94.3
2000
$1.47
 122.5

a) Using the table above, calculate the real price of gasoline per gallon in each year given.
 
 
 
 
 
 
 
 
 
 

b.) Consider a candy bar costing $.25 in 1970. Using column 3 in the table above, about how much would in cost in 2000?