Nothing
ECW1102 Introductory Macroeconomics
Tutorial Questions
(Week 2) Tutorial 1
National Income, Expenditure and the Circular Flow – Measuring a nation’s income
1. *Why do economists use real GDP rather than nominal GDP to gauge economic well-being? 2. Below are some data from the land of milk and honey. Year 2001 2002 2003 Price of Milk $1 $1 $2 Quantity of Milk 100 200 200 Price of Honey $2 $2 $4 Quantity of Honey 50 100 100
Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2001 as the base year. 3. Consider the following data on a country’s GDP: Year Nominal GDP Deflator GDP (base year: 1992) (billions) 1996 $7,662 110 1997 $8,111 112 a. b. c. d. e. f. What was the growth rate of nominal GDP between 1996 and 1997? What was the growth rate of GDP deflator between 1996 and 1997? What was real GDP in 1996? What was real GDP in 1997? What was the growth rate of real GDP between 1996 and 1997? Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain.
4. *Some countries emphasized on GNP rather than GDP as a measure of economic well-being. Which measure should the government prefer if it cares about the total income of their citizens? Which measure should it prefer if it cares about the total amount of economic activity occurring in the country?
1
(Week 3) Tutorial 2
Production, Growth and the Cost of Living – Measuring the cost of living
1. *Economists and policymakers monitor both the GDP deflator and the consumer price index to gauge how quickly prices are rising. However, these two statistics may not always tell the same story. Discuss two important differences that can cause them to diverge. 2. Calculate the consumer price index and the rate of inflation if given a fixed basket of goods of 4 hamburgers and 2 apples by taking the year 2001 as the base year.
Year 2001 2002 2003 Hamburger $1 $2 $3
Price($) Apple $0.50 $1.00 $1.50
3. Describe the three problems that make the
Tutorial Questions
(Week 2) Tutorial 1
National Income, Expenditure and the Circular Flow – Measuring a nation’s income
1. *Why do economists use real GDP rather than nominal GDP to gauge economic well-being? 2. Below are some data from the land of milk and honey. Year 2001 2002 2003 Price of Milk $1 $1 $2 Quantity of Milk 100 200 200 Price of Honey $2 $2 $4 Quantity of Honey 50 100 100
Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2001 as the base year. 3. Consider the following data on a country’s GDP: Year Nominal GDP Deflator GDP (base year: 1992) (billions) 1996 $7,662 110 1997 $8,111 112 a. b. c. d. e. f. What was the growth rate of nominal GDP between 1996 and 1997? What was the growth rate of GDP deflator between 1996 and 1997? What was real GDP in 1996? What was real GDP in 1997? What was the growth rate of real GDP between 1996 and 1997? Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain.
4. *Some countries emphasized on GNP rather than GDP as a measure of economic well-being. Which measure should the government prefer if it cares about the total income of their citizens? Which measure should it prefer if it cares about the total amount of economic activity occurring in the country?
1
(Week 3) Tutorial 2
Production, Growth and the Cost of Living – Measuring the cost of living
1. *Economists and policymakers monitor both the GDP deflator and the consumer price index to gauge how quickly prices are rising. However, these two statistics may not always tell the same story. Discuss two important differences that can cause them to diverge. 2. Calculate the consumer price index and the rate of inflation if given a fixed basket of goods of 4 hamburgers and 2 apples by taking the year 2001 as the base year.
Year 2001 2002 2003 Hamburger $1 $2 $3
Price($) Apple $0.50 $1.00 $1.50
3. Describe the three problems that make the