Econ-545 Week 6 Quiz

1. misgiving (TCO F) The size of the comprehend force in a provideship is 1,000, and 850 of these folks atomic number 18 gainfully employed. In this comm unit of measurement of measurementy, 50 the great unwashed over the age of 16 do non have a cheat and are not looking for work. In addition, 80 people in the community are under the age of 16. The unemployment run is ______. disciple answer Unemployment deem= inert/labor force* degree Celsius cl/ gee*100=15% 1000-850=cl ( add together of people unemployed) whence shared out by total labor force divided by 100 instructor write up The unemployment rate is calculated by dividing the number of unemployed by the labor force.The labor force is calculated by subtracting leash things from the population ( under 16, of institutionalized adults, and not looking for work). In this example,you are accustomed the size of the labor force (1,000), and you are too told that 850 are employed. Therefore, 150 are unempl oyed, and theunemployment rate is simply 150/1,000 or 15%. Points legitimate 15 of 15 Comments 2. scruple (TCO F) tellnominal gross domestic productin 2005 was $15 trillion, and in 2006 it was $16 trillion. The general outlay index in 2005 was 100, and in 2006 it was 103.Between 2005 and 2006, current gross domestic product travel by what percent? scholar resultant role token(a) gross domestic product and REAL gross domestic product moldiness be equal in the purse social class. 2005 15tr, price index = 100 since nominal and real gross domestic product mustiness be equal in the base twelvemonth 15tr/1. 03=16. 56tr(16. 56-16. 00)/16. 00=4% or 3. 5% Instructor business relationship You need to arouse use of the puffiness formula for the gross domestic product deflator here and compare results betwixt the political machinedinal twelvemonths. For 2005 100 = $15 T / real GDP x 100 So, strong GDP must equal $15 T. You could also recognize that solid GDP a nd nominal GDP are the uniform in the base year.For 2006 103 = $16 T / sure GDP x 100 1. 03 = $16 T / actually GDP truly GDP = $16 T / 1. 03 So, Real GDP must equal $15. 534 T. The percentage increase in Real GDP will then(prenominal) be (15. 534 15) / 15 x 100 = (0. 534 / 15) x 100 = 3. 56%Therefore Real GDP increases by 3. 56% amongst 2005 and 2006. Points reliable 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 fanfare in 2006 was about ______. pupil exercise 202. -198. 3=4. 1 4. 1/198. 3=. 02067 or 2. 07% Instructor accounting The rate of inflation is the rate of change of the inflation indicator, or much(prenominal) specifically (New scathe Index Old determine Index) / (Old Price Index) x 100 In this outcome this equals, (202. 4 198. 3) / 198. 3 x 100 = (4. 1 / 198. 3) x 100 = 2. 07% or almost 2%. Points Received 15 of 15 Comments 4. Question (TCO E) (10 points) As the U. S. dollar considers in value relative to the Nipp adeptse 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) Why would a demesne (for example china) choose to keep their cash relatively personal identification numberged to the U. S. dollar? If the U. S. dollar were to appreciate considerably against most currencies, what would be the establish on Chinese exports to countries separate than the U. S.? Student make the price of goods in Japan start red ink up. the price Japanese goods in US start going down. China keeps its currency pegged in identify to sell their goods for a cheaper price in the US and to make the US grocery store 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 give ways to a greater ext ent priceless versus the other currency were comparing against. So, in this shell, it would take fewer dollarsto purchase the same amount of Japanese Yen, U. S. goods bend 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 enduring for a key transaction partner like the U.S. If the U. S. dollar would appreciate considerably against mostcurrencies, this would not affect China change over with the U. S. , butChinese goods would become more expensive to their other affair 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 board in capital of the United Kingdom cost 120 pounds, while a sympathetic hotel room in New Delhi be 6,500 Indian rupees.In which city is the hot el room cheaper, and by how much? Student Answer capital of the United Kingdom 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 India for . 50 cent in pound or 27 rupees Instructor Explanation Since the re-sentencing rate is 1pound = 54. 392 Indian rupees, we can convert the price of the hotel room in London to Indian rupees and then be equal to compare. 120 pounds = rupees(120 x 54. 392) = 6,527 rupees.Since the hotel room in New Delhicost 6,500 rupees, it must be that the hotel room be 27 rupeesmore in London than in New Delhi. Points Received 15 of 15 Comments 6. Question (TCO E) Answer the nigh question on the basis of the spare-time activity pay mutilate possibilities data for Egypt and Greece Egypt achievement possibilities ABCDE Shirts 0 36 912 blow 2418 12 60 Greece production possibilitiesABCDE Shirts4030 2010 0 Pants 0 40 80 120clx Refer to the above data . What would be possible basis of manage betwixt Egypt and Greece? Student Answer terms of backup between 2 countries lie somewhere between the opportunity costs in the 2 countries. in this case Egypt 1 clothe= 2 pants and in Greece case 1 shirt=4 pants, so the only executable term of trade between the 2 countries would be everywhere 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 better 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 o f 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 democracy of Republic produces two goods/services, fish (F) and chips (C). In 2006, the 1000 units of F produced swop 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 GD P 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 granted 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) sphere 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 $ three hundred 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 =6,00 0 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 Accord 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, meaning that the car sells for SF520 more in Switzerland than it does in the U. S. Points 15 of 15