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Macroeconomic Aggregates: Exercises and Applications

Macroeconomic Aggregates: Exercises and Applications. Lecture 10 – academic year 2013/14 Introduction to Economics Fabio Landini. Ex. 10.1 – US ’ s GDP. Question:

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Macroeconomic Aggregates: Exercises and Applications

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  1. Macroeconomic Aggregates: Exercises and Applications Lecture 10 – academic year 2013/14 Introduction to Economics Fabio Landini

  2. Ex. 10.1 – US’s GDP Question: Suppose to measure the GDP of US summing the value of all final goods and services in the economy. Determine the effects on GDP of the following transactions: a) A restaurant purchases fish for $100 from a fisher; b) A household spend $100 eating fish in a restaurant; c) Delta Airlines buys a new jet from Boing for $200million; d) A Greek airline company buy a new jet from Boing for $200million; e) Delta Airlines sells on of her jet to Denzel Washington for $100million;

  3. Ex. 10.2 – Mines and Jewels Consider an economy where: i) A company that extract argent pay workers €200,000 to extract 75 kg of argent. The argent is then sold to a jeweller for €300,000; ii) The jeweller pays her workers €250,000 to produce necklaces, which are then sold to final consumers for €1 million;

  4. Ex. 10.2 – Mines and Jewels Questions: • Using the approach based on the “value of final goods”, how much is the GDP of this economy; • Which is the value added at each stage of production? Using the approach based on the added value, how much is the GDP of this economy? • What is the value of of total wages and profits? Using the approach based on income, how much id the GDP of this economy?

  5. Ex. 10.3 – Cars, CPU and Oranges (I) An economy produces three goods: cars, computers and oranges. Quantity and unitary prices for the years 2006 – 2007 are the following:

  6. Ex. 10.3 – Cars, CPU and Oranges (I) Questions: • Which is the nominal GDP of the of the economy in 2006 and 2007? How much does it vary? • Using the 2006 prices as a basis, which is the real GDP in 2006 and 2007? How much does it vary? • Using the 2007 prices as a basis, which is the real GDP in 2006 and 2007? How much does it vary? • Why doe the growth rates in b) and c) differ? Which is the most appropriate? Motivate your answer.

  7. Ex. 10.4 – Cars, CPU and Oranges (II) Consider the same economy described before. Questions: Suppose that we use the 2006 prices as the basis to compute the real GDP in 2006 and 2007. Compute the GDP deflator for the year 2006 and 2007, and the inflation rate between 2006 and 2007

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