Gm545 Quiz Study Guide

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GM545 QUIZ 2 PRACTICE

1. (a.) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $330 billion.  The general price index in 1999 was 100 and in 2001 it was 150.  Between 1999 and 2001, the real GDP rose by what percent? 

(b.) Use the following scenario to answer questions (b1) and (b2).

In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.)   Refer to the data in the above Scenario.  What is the size of the labor force in the United States for the given year?   

(b2.)   Refer to the data in the above Scenario.  What is the unemployment rate in the United States for the given year?  

 

2. (TCO E and I)  Let the exchange rate be defined as the number of dollars per British pound. Assume there is a decrease in U.S. interest rates relative to that of Britain

a. Would this event cause the demand for the dollar to increase or decrease relative to demand for the pound?  Why?  

(b.) Has the dollar appreciated or depreciated in value relative to the pound?  

 
(c.) Does this change in the value of the dollar make imports cheaper or more expensive for Americans?  Are American exports cheaper or more expensive for importers of U.S. goods in Great Britain?  Illustrate by showing the price of a U.S. cell phone in Britain, before and after the change in the exchange rate.   

(d.) If you had a business exporting goods to Britain, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back?

3…..(TCO F) The consumer price index was 190.7 in January of 2005, and it was 198.3 in January of 2006. ...
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