Eco202 Case Assignment

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ECO202 – Macroeconomics
Module 2 Case Assignment
Dr. Herbert Weinraub

GDP:
Questions:
1. Assume that consumer spending is $1,000, government expenditures are $300, investments by industry are $150, and the excess of exports over imports is $200. Compute the GDP. (Please show your work) The basic formula for calculating the GDP is: Y = C + I + E + G C=1000; I=150; E=200 and G=300

Y=1000+150+200+300=1650, Y=1650
2. If we are able to increase our domestic energy production, and that allows us to import less oil from foreign countries, briefly explain what will happen to the GDP. If Exports exceeds imports then it will add to the GDP but if imports are more than the exports it subtracts from the GDP. With this being said if we import less oil from foreign countries then it would positively impact the nation’s GDP. Inflation

Questions:
1. If the CPI went from 100 to 104 during the past year, the rate of inflation, in percent, was? (Please show your work)
Rate of inflation = (104 – 100)/100 x 100
= 4/100 x 100 = 4%
2. If the CPI went from 231 to 234 over the past year, the rate of inflation was? (Please show your work) Rate of inflation = (234 – 231)/231 x 100, = 3/231 x 100, = 1.30% Unemployment rate
Questions:
1. Assume the entire civilian labor force is 20,000 people and the number of unemployed is 2,000 people. Compute the unemployment rate, in percent. (Please show your work) Unemployment Rate= 2000/20000 = 0.1 *100 = 10

Unemployment Rate=10%
2. Assume the entire civilian labor force is 20,000 people, the number of unemployed is 2,000 people but, 500 of the unemployed have now stopped looking for work. Compute the unemployment rate, in percent. (Please show your work) Unemployment Rate=1500/19500= 0.078

Unemployment Rate= 7.8%
International Economic Trends
1. Compare the four countries in terms of Output and Growth (Real GDP). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2011 changes are addressed. The 2008 economic contraction affected the world economy. 2008 seen the housing market crash both here and in Japan. By 2009, Canada, Japan, the United Kingdom, and the United States all saw negative economic growth. Japan’s economy was hit the hardest with -10% growth in 2009 as demand for their products weakened. Canada was the last to fall into negative growth and experienced the least negative growth of the four countries. All experienced a partial recovery in 2010 as GDP came out of negative growth and each seen minimal growth. The global economic crisis, however, hit the country’s mainstay exports hard and brought on Japan’s worst recession since World War II, in late 2008. Since mid-2009, Japan has limped back into recovery, helped by exports and stronger capital investment. 2011 was looking up for the Japanese economy, relatively speaking, but the earthquake and tsunami in early March 2011 has put the economy in a tailspin with a large portion of the country affected not only by the devastation but the effects of the nuclear power plan leakage. Canada, the UK, and the U.S. appear to be going into the double dip recession as the economies in 2010 were making slow recovery, 2011 has seen more contraction. The monetary policies of all four countries have slowed the pace of the recession, but are going to be unable to fix the problems, because the national debt are so high, deficit are rising, and projections are not good. Monetary policy, keeping interest rates low and printing more money can only do so much; fiscal policies implementing stimulus packages have foreseeable failed and only added to national debts. 2. Compare the four countries with respect to Inflation and Prices (CPI). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2011 changes are addressed. As the economies of Japan, Canada, the UK, and the U.S. were entering the recession in 2008, prices...
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