Econ-545 Week 6 Quiz

1. head word (TCO F) The size of the labor force in a comm social unity is 1,000, and 850 of these folks are gainfully employed. In this community, 50 people over the age of 16 do not pee a job and are not looking for work. In addition, 80 people in the community are under the age of 16. The unemployment rove is ______. schoolchild Answer Unemployment commit=unemployed/labor force* snow 150/ one hundred0*100=15% pace-850=150 ( payoff of people unemployed) therefore divided by total labor force divided by 100 teacher invoice The unemployment evaluate is mensural by dividing the number of unemployed by the labor force.The labor force is calculated by subtracting three things from the population ( under 16, of institutionalized adults, and not looking for work). In this example,you are given the size of the labor force (1,000), and you are similarly told that 850 are employed. Therefore, 150 are unemployed, and theunemployment rate is simply 150/1,000 or 15%. Po ints Received 15 of 15 Comments 2. Question (TCO F) Suppose nominal phrase gross domestic productin 2005 was $15 trillion, and in 2006 it was $16 trillion. The general toll business leader in 2005 was 100, and in 2006 it was 103.Between 2005 and 2006,real gross domestic productrose by what percent? Student Answer Nominal gross domestic product and REAL gross domestic product must be impact in the innovation stratum. 2005 15tr, price index = 100 since nominal and real gross domestic product must be capable in the sottish form 15tr/1. 03=16. 56tr(16. 56-16. 00)/16. 00=4% or 3. 5% Instructor Explanation You need to make use of the inflation formula for the gross domestic product deflator here and compare results betwixt the dickens years. For 2005 100 = $15 T / square gross domestic product x 100 So, very GDP must equal $15 T. You could also recognize that really GDP and nominal GDP are the same in the base year.For 2006 103 = $16 T / Real GDP x 100 1. 03 = $ 16 T / Real GDP Real GDP = $16 T / 1. 03 So, Real GDP must equal $15. 534 T. The division increase in Real GDP will then be (15. 534 15) / 15 x 100 = (0. 534 / 15) x 100 = 3. 56%Therefore Real GDP increases by 3. 56% mingled with 2005 and 2006. Points Received 19 of 20 Comments 3. Question (TCO F) The consumer price index was 198. 3 in January of 2006, and it was 202. 4 in January of 2007. Therefore, the rate of inflation in 2006 was about ______. Student Answer 202. -198. 3=4. 1 4. 1/198. 3=. 02067 or 2. 07% Instructor Explanation The rate of inflation is the rate of change of the inflation indicator, or to a greater extent specifically ( freshly Price Index Old Price Index) / (Old Price Index) x 100 In this theme this equals, (202. 4 198. 3) / 198. 3 x 100 = (4. 1 / 198. 3) x 100 = 2. 07% or approximately 2%. Points Received 15 of 15 Comments 4. Question (TCO E) (10 points) As the U. S. dollar mark appreciates in value relative to the Nippones e Yen, what happens to the price of U. S. goods in Japan?What happens to the price of Japanese goods in the U. S.? (10 points) wherefore would a country (for example china) choose to keep their funds relatively pegged to the U. S. dollar? If the U. S. dollar were to appreciate considerably against most currencies, what would be the feat on Chinese exports to countries otherwise than the U. S.? Student Answer the price of goods in Japan start going up. the price Japanese goods in US start going down. China keeps its funds pegged in order to snitch their goods for a cheaper price in the US and to make the US flip dependent on their product. If dollar appreciate it will drag Chinas currency with it,in other words reducing China export. Instructor Explanation When a countrys currency appreciates, it becomes much valuable versus the other currency were comparing against. So, in this case, it would guard fewer dollarsto purchase the same amount of Japanese Yen, U. S. goo ds become more expensive to Japanese buyers, and Japanese goods become cheaper to U. S. buyers. A country such as China might choose to peg their currency to the U. S. dollar to keep prices stable for a keytrading partner corresponding the U.S. If the U. S. dollar would appreciate considerably against mostcurrencies, this would not affect China trade with the U. S. , butChinese goods would become more expensive to their other trading partners, and could cause Chinese exports to these other markets to decrease. Points Received 17 of 20 Comments 5. Question (TCO E) Suppose the Indian rupee price of oneBritish pound is 54. 392 rupees for each pound. A hotel room in London be 120 pounds, while a similar hotel room in New Delhi be 6,500 Indian rupees.In which city is the hotel room cheaper, and by how much? Student Answer London hotel room 120 pound or 6527 rupee (120*54. 392) India hotel room 119. 50 pounds (6500/54. 392) or 6500 rupee the hotel room is cheaper in I ndia for . 50 cent in pound or 27 rupees Instructor Explanation Since the supplant rate is 1pound = 54. 392 Indian rupees, we can metamorphose the price of the hotel room in London to Indian rupees and then be able to compare. 120 pounds = rupees(120 x 54. 392) = 6,527 rupees.Since the hotel room in New Delhicosts 6,500 rupees, it must be that the hotel room costs 27 rupeesmore in London than in New Delhi. Points Received 15 of 15 Comments 6. Question (TCO E) Answer the next question on the basis of the following outturn possibilities data for Egypt and Greece Egypt production possibilities ABCDE Shirts 0 36 912 Pants 2418 12 60 Greece production possibilitiesABCDE Shirts4030 2010 0 Pants 0 40 80 120 one hundred sixty Refer to the above data. What would be feasible names of trade surrounded by Egypt and Greece? Student Answer hurt of trade between 2 countries consist somewhere between the opportunity costs in the 2 countries. in this case Egypt 1 shirt= 2 pants and in Greece case 1 shirt=4 pants, so the only feasible term of trade between the 2 countries would be anywhere in between these limits anything between 2 and 4 shirts and pants would work. t any terms of trade high or lower than 2 or 4 pants per shirt , one of the countries would be able to do snap off than the terms of trade simply by trading off resources in their own country. Instructor Explanation Feasible terms of trade between 2 countries lie somewhere between the opportunity costs in the 2 countries. In this case, in Egypt 1 Shirt = 2 Pants, and in Greece 1 Shirt = 4 Pants. So,the only feasible terms of trade between the 2 countries would be anywhere in between these limits anything between 2 and 4 Pants per Shirts would work.At any terms of trade higher or lower than2 to 4 Pants per Shirts, one of the countries would be able to do better than the terms of trade simply by trading off resources in their own country. Points Received 20 of 20 Comments 7. Question (TCO F) The Republic of Republic produces two goods/services, fish (F) and chips (C). In 2006, the 1000 units of F produced exchange for $8 per unit and the 5000 units of C produced sold for $1 per unit. In 2007, the 1500 units of F produced sold for $10 per unit, and the 6,000 units of C produced sold for $2 per unit.Calculate Real GDP for 2007, assuming that 2006 is the base year. Student Answer base year 2006 1,000 units of fish at 8/unit =8,000 5,000 units of chips at 1/unit =5,000 GDP=13,000 2007 1,500 units of fish at 10/unit-15,000 6,000 units of chips at 2/ units at 2/unit =12000 GDP =27,000 Real GDP with 2006 as the base year 1500 units of fish at 8/unit =12,000 6,000 unit chips at 1/unit = 6,000 Real GDP =18,000 18,000-13,000/18,000 GDP grew by 28% Instructor Explanation For 2006, Nomimal GDP= ($8 x 1000) + ($1 x 5000) = $13,000.Real GDP for 2006 would be the same ($13,000). For 2007, Nominal GDP = ($10 x 1500) + ($2 x 6000) = $27,000. Real GDP for 2007 would be ($8 x 1500) + ($1 x 6000) = $18,000. That is, when calculating real GDP for a given year you use the production numbers for that year and the prices from the baseyear. Points Received 12 of 15 Comments 8. Question (TCO F)Country Aproduces two goods,elephantsandsaddles. In the year2006, the10 units of elephants produced sold for $2,000 per unit and the25 units ofsaddles produced sold for $200 per unit.In 2007, the20 units ofelephants produced sold for $3,000 per unit, and the 50 units ofsaddles produced sold for $300 per unit. Real GDP for 2007, assuming that2006 is the base year, is ______. Student Answer base year 2006 10 units at 2000 per unit =20,000 25 saddles at 200=5000 GDP=25,000 2007 20 units at 3,000 per unit =6,000 50 saddles at 300=15000 GDP=21,000 real GDP with 2006 as the base year 20 units of elephants at 3000 = 60000 for 50 units of saddles at 25 =1250 real GDP 61250 61250-21000/61250 real GDP grew by 65%. Instructor Explanation Real GDP is calculated for a given year by using the quantities produced in that year and substituting the base year prices. In this example we get 20 ($2,000) +50 ($200) = $40,000 + $10,000 = $50,000. Points Received 12 of 15 Comments 9. Question (TCO E) A Honda accede sells for $28,000 in the United States and for SF35,520 in Switzerland. Given an exchange rate of SF1. 5 = $1, how do the car prices of both countries compare? Student Answer with an exchange rate of SF1. 25=$1 28,000*1. 25=35,000 SF price is 35,520 the car sells for SF520 more in Switzerland that it does in the US. Instructor Explanation At an exchange rate of $1 = SF1. 25 $28,000 would equal (1. 25 x 28,000) Swiss Francs = SF35,000, implication that the car sells for SF520 more in Switzerland than it does in the U. S. Points 15 of 15