inter macro homework 1 Page 1 of 4
\n1. Write your assigned student number in the box.
\n2. Submit the assignment with the pages stapled together.
\n3. To receive full credit, answers must be accompanied with relevant
\nsolutions\/explanations.
\n4. Write your response in the relevant space provided. Responses provided elsewhere will
\nbe ignored. Furthermore, responses with unintelligible handwriting will be treated as
\nincorrect.
\n5. You acknowledge that this is your own individual work. Late homework is not
\naccepted.
\nStudent Number
\ninter macro homework 1 Page 2 of 4
\n1. The following transactions occurred in a given year. Firm A manufactures leather using a
\nfactory valued at $20,000. Suppose Firm A produced $2,000 worth of leather and incurred
\nthe following costs: $1,000 for the salaries of workers, $100 for interest payments on a
\nbank loan, and taxes of $200. Firm A sold all of its leather to Firm B, which is a
\nmanufacturer of luxury bags. Suppose Firm B produced four bags at a cost of $800 each.
\nThe cost of each bag consisted of paying for $500 worth of raw materials, paying for the
\nsalaries of workers for $200, and $100 in taxes. Firm B has a factory valued at $30,000.
\nFirm B sold to the public three of its four bags for $1,000 each. Calculate the contribution
\nto GDP using the following:
\n1) Production approach.
\n2) Income approach.
\n3) Expenditure approach.
\ninter macro homework 1 Page 3 of 4
\n2. Consider a two-good (A and B), two-period (year 1 and year 2) economy. In year 1, the
\neconomy produced 10 units of A at a per unit price of $1 and 5 units of B at a per unit price
\nof $2. In year 2, the economy produced 15 units of A at a per unit price of $1 and 5 units
\nof B at a per unit price of $3. Calculate real GDP for years 1 and 2 using the following
\nmethods:
\n1) Laspeyres.
\n2) Paasche.
\n3) Fisher.
\n4) Calculate and compare the growth rate of real GDP using the three approaches.
\ninter macro homework 1 Page 4 of 4
\n3. Mankiw, page 42, question 2. A farmer grows a bushel of wheat and sells it to a miller for
\n$1. The miller turns the wheat into flour and then sells the flour to a baker for $3. The
\nbaker uses the flour to make bread and sells the bread to an engineer for $6. The engineer
\neats the bread.
\n1) What is the value added by each person
\n2) What is the bread\u2019s contribution to GDP
\n4. Mankiw, page 42, question 3. Suppose a woman marries her butler. After they are married,
\nher husband continues to wait on her as before, and she continues to support him as before
\n(but as a husband rather than an employee).
\n1) How does the marriage affect GDP (Note: That is, the butler is treated as a husband,
\nnot as an employee)
\n2) How should it affect GDP (Note: That is, the butler is treated as an employee, not as
\na husband)<\/p>\n","protected":false},"excerpt":{"rendered":"
inter macro homework 1 Page 1 of 4 1. Write your assigned student number in the box. 2. Submit the assignment with the pages stapled together. 3. To receive full credit, answers must be accompanied with relevant solutions\/explanations. 4. Write Read More …<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-95006","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/95006","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\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=95006"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/95006\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=95006"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=95006"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=95006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}