ECN 201<\/p>\n
1. The chart below presents 2003 data from the national-income accounts of the United States.
\nComponent Billions of Dollars
\nPersonal consumption 7,760.9
\nEmployee compensation 6,289.0
\nRents 153.8
\nGov\u2019t consumption and investment 2,075.3
\nImports 1,544.3
\nDepreciation 1,379.5
\nCorporate profits 1,021.1
\nInterest income 543.0 Exports 1,046.2
\nGross private investment 1,665.8
\nIndirect business taxes 838.6
\nSelf-employment income 834.1
\nNet income to foreigners -55.2
\na. Indicate the various components of GDP when it is derived by the expenditure approach. Calculate GDP using the expenditure approach.
\nb. Indicate the various components of GDP when it is derived by the resource cost \u2013 income approach. Calculate GDP using the resource \u2013 cost income approach (you\u2019d better get the same number as you did in part a.!!!!!!!)
\n2. Which of the following would increase GDP?
\na. A burglar steals your CD player from your dorm room.
\nb. You win $100 playing blackjack with your buddies in the dorm.
\nc. You decide to work five more hours each week at your library job since you figure you can easily pass EC 202.
\nd. You sell your CD player and buy 20 shares of Coca-Cola stock with the proceeds.
\nBriefly explain your answer choice.
\nHomework continues on other side of sheet
\n2
\n3. In the year 1999, you remember your dad telling you \u201cboy, when I was your age, I
\nmade $1.50 per hour. You don\u2019t know how good you got it.\u201d The reason for this
\nheart-to-heart is that in 1999, you earned $6.00 per hour and complained about
\nhow low your pay was.
\nClearly, your dad is confusing nominal and real values. When your dad was your
\nage, it was 1969 and the CPI was 36.7. In 1999, the CPI was 166.1 Tell your dad
\nwhat the 1999 real equivalent of his wage was. Did he really make less than you?
\n4. Suppose Country A is able to sustain an economic growth rate of 3% a
\nyear and Country B is able to sustain an economic growth rate of 1% a
\nyear.
\na. How long will it take for income to double in each country?
\nb. Another way to look at the effect of growth rates on income is to use the
\nconcept of compound interest. The formula for compound interest is:
\n? ?t F ? P? 1? r
\nP is the starting amount, F is the future amount, r is the growth rate, and t
\nis the number of years the economy has been growing for at that particular
\ngrowth rate. Note: enter in the growth rate in decimal form. That is, if
\nthe growth rate is 3%, then r=0.03.
\nSuppose Country A and Country B both start with income equal to $100.
\nAt their respective growth rates, what will income be in each country after
\n25 years? 75 years? 200 years? What does tell you about where income
\ninequality between countries comes from?
\nc. Suppose you are elected Prime Minister of Country B. Propose two
\npolicies that would help Country B increase its growth rate? Explain why
\nyour policies will promote economic growth.<\/p>\n","protected":false},"excerpt":{"rendered":"
ECN 201 1. The chart below presents 2003 data from the national-income accounts of the United States. Component Billions of Dollars Personal consumption 7,760.9 Employee compensation 6,289.0 Rents 153.8 Gov\u2019t consumption and investment 2,075.3 Imports 1,544.3 Depreciation 1,379.5 Corporate profits Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-8904","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/8904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=8904"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/8904\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=8904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=8904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=8904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}