Chapter3answer
NSS Exploring Economics 5
Chapter 3 Macroeconomics Problems
Questions
P.68
Think it over
1.
What is inflation?
2.
How does inflation affect your daily life?
3.
As a student, you do not have a job. Are you classified as unemployed?
4.
How does unemployment affect Hong Kong’s economy?
P.68
Think it over (Cartoon)
Mom, how do inflation and unemployment affect us?
P.69
Test yourself
3.1
According to the definitions above, are the following situations examples of inflation or deflation? Why?
a. Because of technological improvement, the price of MP3 players drops steadily.
b. Suppose that during the 2008 Beijing Olympic Games, prices of all goods and services in Beijing increased by 10%.
c. A ferry company raises its fare by 20%.
P.71
Test yourself
3.2
Refer to Table 3.1. Calculate the year-on-year percentage changes in the general price level in 2003 and 2007, respectively.
P.72
Test yourself
3.3
The data below show the year-on-year percentage change in the implicit price deflator of GDP from 1997 to 2008. Plot the data on Fig 3.4. Do the two curves coincide? Explain.
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Year-on-year % change in the implicit price deflator of GDP (%)
5.7
0.8
-4.5
-3.6
-1.9
-3.5
-6.2
-3.5
-0.1
-0.3
2.9
1.5
P.73
Test yourself
3.4 Based on the hypothetical data provided below, find the real wages in 2009 and 2010, respectively. Have the real wages increased between 2009 and 2010?
Year
Price Index
Nominal wages ($)
2009
105
10,000
2010
110
10,800
P.75
Test yourself
3.5
Suppose the expected inflation rate and the expected real interest rate are 10% and 4%, respectively.
a. What is the nominal interest rate?
b. If the actual inflation rate turns out to be 6% only, what would the actual real interest rate be?
P.79
Test yourself
3.6
Identify the providers and recipients of fixed future payments among the following trading partners. Determine who will gain during unanticipated deflation.
Trading partners
Chapter 3 Macroeconomics Problems
Questions
P.68
Think it over
1.
What is inflation?
2.
How does inflation affect your daily life?
3.
As a student, you do not have a job. Are you classified as unemployed?
4.
How does unemployment affect Hong Kong’s economy?
P.68
Think it over (Cartoon)
Mom, how do inflation and unemployment affect us?
P.69
Test yourself
3.1
According to the definitions above, are the following situations examples of inflation or deflation? Why?
a. Because of technological improvement, the price of MP3 players drops steadily.
b. Suppose that during the 2008 Beijing Olympic Games, prices of all goods and services in Beijing increased by 10%.
c. A ferry company raises its fare by 20%.
P.71
Test yourself
3.2
Refer to Table 3.1. Calculate the year-on-year percentage changes in the general price level in 2003 and 2007, respectively.
P.72
Test yourself
3.3
The data below show the year-on-year percentage change in the implicit price deflator of GDP from 1997 to 2008. Plot the data on Fig 3.4. Do the two curves coincide? Explain.
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Year-on-year % change in the implicit price deflator of GDP (%)
5.7
0.8
-4.5
-3.6
-1.9
-3.5
-6.2
-3.5
-0.1
-0.3
2.9
1.5
P.73
Test yourself
3.4 Based on the hypothetical data provided below, find the real wages in 2009 and 2010, respectively. Have the real wages increased between 2009 and 2010?
Year
Price Index
Nominal wages ($)
2009
105
10,000
2010
110
10,800
P.75
Test yourself
3.5
Suppose the expected inflation rate and the expected real interest rate are 10% and 4%, respectively.
a. What is the nominal interest rate?
b. If the actual inflation rate turns out to be 6% only, what would the actual real interest rate be?
P.79
Test yourself
3.6
Identify the providers and recipients of fixed future payments among the following trading partners. Determine who will gain during unanticipated deflation.
Trading partners