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ECO 120: GLOBAL MACROECONOMICS

Spring 2012

G. KNOWLES

H-I-C #1 CHAPTER 7 & 8: Due Thursday February 16 (5 points)


Name
1. Which component of GDP will be affected by each of the following transactions involving Ford? If none
of the components will be affected briefly explain why.
a. You purchase a new Ford Escape Hybrid.- GDP Affected
b. You purchase a 2008 Ford Escape Hybrid from a friend.- GDP not affected
c. Ford purchases door parts for the Escape from an auto parts manufacturer in Wisconsin.-GDP not
affected
d. Ford produces 1,000 Escapes in Missouri and ships them to a dealer in China.- GDP affected
e. The state of Missouri builds a new highway to improve access to the Ford Escape plant.- GDP
affected
2. Which of the following is likely to increase measured GDP and which is likely to reduce it?
a. The fraction of women working outside the home increases.- Increase GDP
b. There is a sharp increase in the crime rate.- Decrease GDP
c. Higher tax rates cause some people to hide more of the income they earn.-Decrease GDP
3. Complete the following Table (Source: bea.gov for GDP; bls.gov for CPI)
GDP
% Price
GDP in bil. of
Real GDP
Deflator
Level
current dollars
chained 2005 $
--------- %
2007
14,028.7
13,206.4
%
2008
14,291.5
13,161.9
%
2009
13,939.0
12,703.1
%
2010
14,526.5
13,088.0
%
2011
15,087.7
13,313.4

CPI
207.342
215.303
214.537
218.056
224.939

% Price
Level
--------- %
%
%
%
%

4. Complete the following Table (Source: bls.gov) [Calculate in order (1), (2), then (3)]
2009

2010

139,877,000

139,064,000

9.3%

9.6%

65.4%

64.7%

Working-age population (3)


Employment
Unemployment (1)
Unemployment rate
Labor force (2)
Labor force participation rate

Discouraged Workers
778,000
1,173,000
Explain how going from 2009 to 2010 the Employment situation was worse than indicated by the Unemployment Rate.

5. The Great Depression was the worst economic disaster in U.S. history in terms of declines in real GDP and
increases in unemployment rates. Complete the following Table from the Great Depression.
Year

Nominal GDP
(billions of dollars)

GDP Price Deflator


(2000 = 100)

Real GDP
(billions of 2000 dollars)

1929

$103.6

10.6

$977

1933

$56.4

7.9

$714

Percentage Decline in
Real GDP
xxxxx
-27.0%

6. The following table shows the top 10 films of all time through 2008, measures by box office receipts
in the U.S. with some other notable films. Calculate the real receipts of these films and prepare a
new rank of the top films based on real receipts. Assume that all of the receipts were generated in the
year the film was released. (base year for CPI is 1982-84)
Rank
1
2
3
4
5
6
7
8
9
10
42
90
103
147
169

Film
Titanic
The Dark Knight
Star Wars
Shrek 2
E.T. the ExtraTerrestrial
Star Wars: Episode I
The Phantom Menace
Pirates of the Caribbean:
Dead Mans Chest
Spider-Man
Star Wars: Episode III
Revenge of the Sith
Lord of the Rings: The
Return of the King
Jaws
Gone with the Wind
Snow White and the
Seven Dwarfs
The Sound of Music
One Hundred and One
Dalmatians

Total box
office receipts
$600,779,824
533,316,061
460,935,655
436,471,036

Year
released
1997
2008
1977
2004

CPI
161
215
61
189

Real Receipts
373,155,170
248,053,981
755,632,221
230,937,056

434,949,459

1982

97

448,401,504

431,065,444

1999

167

258,123,020

423,032,628
403,706,375

2006
2002

202
180

209,422,093
224,281,319

380,262,555

2005

195

195,006,438

377,019,252
260,000,000
198,655,278

2003
1975
1939

184
54
14

204,901,767
481,481,481
1,418,966,271

184,925,485
163,214,286

1937
1965

14
32

1,320,896,321
510,044,643

153,000,000

1961

30

510,000,000

Rank Based on
Real Receipts
8
10
3
10
7
9
12
11
14
13
6
1
2
4
5