Macroeconomics 1 (ECON1192/D) Problem Set

Question 1 (2 marks)
a. Define GDP, including all major elements of it. (0.5 mark)
b. What items are not included in the calculation of GDP? Name at least two and
explain. (0.5 mark)
c. How is GDP calculated using the expenditure approach? Explain. (0.5 mark)
d. Explain the problem of "double-counting" and how it can be avoided. (0.5 mark)

Case Study 1 (9 marks)

Use readings 4 and 5 to answer the following:
1. What are the components of GDP that may be affected by the legalization of
medicinal cannabis/marijuana in Washington and Colorado?
Enumerate two GDP components that may be affected (1 mark)
Explain how and why these components may be affected (2 marks)
Cite other readings, articles, or media which illustrate the impacts of
the legalization to the components enumerated. Keep in mind that
the quality and number of materials youll present will also be
assessed. (2 marks for discussion, maximum of 1 mark for
references)
2. If the legalization of medicinal cannabis/marijuana is implemented in more
States, what will be the impact of this reform on the economy of United
States, ceteris paribus? Explain in detail and use references to support your
claim. (2 marks for discussion, maximum of 1 mark for references)
Case Study 2 (6 marks)
Use readings 1-3 to answer the following questions:
a. Traditionally, what is the treatment of a designer handbag as an economic good? Based on
the given articles, what is being pointed out as a potential new function? Compare and
contrast the traditional treatment of handbags to the new perceived treatment of it. (3
marks)
b. If this practice continues, would it affect the market for loanable funds, and if so how?
Discuss in detail how this may (or may not) affect the specific components of the
loanable funds market. (2 marks)
Graphically illustrate the effect of this, if any, highlighting the final equilibrium. (1
mark)

Case Study 3 (7 marks)

Using the attached reading 6, answer the following:
a. Use reading 6 as your basis for establishing the past conditions of the Vietnamese economy.
Using more recent data and materials (2011 and beyond) that you source and reference,
compare and contrast the following: (4 marks)
i.
Vietnams level of FDI
ii.
Sources of Vietnams FDI
iii.
Vietnams attractiveness for FDI
iv.
Economic effects of the FDI inflows in Vietnam
b. What are the potential effects of these factors identified in part (a) to the growth of the
Vietnamese economy? (2 marks) Use necessary references to clarify and highlight the points
you present. (1 mark)