ECON 2 Santa Monica College GDP Unemployment & Business Cycle Questions – Question Description
I’m working on a macro economics question and need the explanation and answer to help me learn.
1. Given the following (nominal) macroeconomic data for the years 2014, 2015, and 2016; and using 2015 as a base-year:
2014 2015 2016
P Q P Q P Q
COFFEE $0.75 50 $0.95 75 $1.15 80
SHOES $15 60 $17 65 $20 70
The Real Rate of Economic Growth between 2015 and 2016 is:
2. Given the following macroeconomic data of the following 3 years:
Nominal GDP (2020) = $3000 ; (2021) = $3500 ; (2022) = $3900
Real GDP (2020) = $3200 ; (2021) = 3500 ; (2022) = $3690
What is this hypothetical economy’s base year? Briefly explain why.
3. Using the information in #2 above, what is the economy’s approximate rate of inflation between 2021 and 2022?
4. Mexico, which is one of the major trading partners of the United States, experiences an economic downturn with unemployment exceeding 10%. To reduce the rate of unemployment in Mexico, Andres Obrador, the country’s President, should ________ (decrease or increase) the value its currency (the Peso) against that of the United States. Consequently, Mexico’s GDP would ______ (increase or decrease).
5. Unemployment benefits, Medicare, Social Security, Welfare subsidy, Disability are part of government spending but they not considered transfer payments. True or False.
6. If the value of US$ and Mexican Peso (MXN) changes from US$1 = 17.14 MXN TO US$1 = 18 MXN, the value of US$ appreciates in value, which has a tendency to bring down the value of US exports to Mexico, causing the rate of unemployment to go down and GDP to go up in the United States. True or False.
7. Using the same currency movements as indicated in #6 above. Mexicans buy _____ (more or less) goods made in America, which has a tendency to ____ (increase / decrease) the rate of unemployment in the United States.
8. Out of the 4 key components that made up the economy’s GDP under the expenditure approach, as discussed in the textbook, which one is closely determined by Disposable Income?
9. Name the different types of unemployment.
10. Out of the four phases of a Business Cycle, the peak tends to result in ZERO rate of overall unemployment. True or False.
11. Out of the 4 key components that made up the economy’s GDP under the expenditure approach, the largest of the four is Personal Income. True or False.
12. The key determinant of Gross Private Domestic Investment is Disposable Income, which is indirectly impacted by the government’s tax policy. True or False.
13. There is no such thing as Full Employment; therefore, 0% overall rate of unemployment is never possible. True or False.
14. EXTRA CREDIT: At the peak of the Business Cycle, the economy experiences an unemployment at around 4-6%, with cyclical unemployment at 0% and that the main concern of the policymakers is inflation but not so much of unemployment. True or False.
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